Document:

Exhibit 4.10

English Translation

 

Beijing Weland International Education and Technology Corp. Share Transfer Framework Agreement

 

Among

 

Zhang Tian

 

Xu Heng

 

Beijing Xueda Information Technology Co., Ltd.

 

Chen Li

 

and

 

Song Junbo

 

March 30, 2012

 

1

 

TABLE OF CONTENT

 

	
SECTION 1 DEFINITION
    	
 
    	
4
    
	
 
	
SECTION 2 FUNDAMENTAL TRANSACTION ARRANGEMENT
    	
 
    	
5
    
	
 
	
SECTION 3 SHARE TRANSFER AND PAYMENT ARRANGEMENT   RELATED TO SHARE TRANSFER
    	
 
    	
5
    
	
 
	
SECTION 4 HANDOVER
    	
 
    	
7
    
	
 
	
SECTION 5 ADJUSTMENT ON CLOSING DATE
    	
 
    	
8
    
	
 
	
SECTION 6 EFFECT
    	
 
    	
10
    
	
 
	
SECTION 7 REPRESENTATIONS AND WARRANTIES; COVENANTS
    	
 
    	
10
    
	
 
	
SECTION 8 TERMINATION OF AGREEMENT AND LIABILITY FOR   BREACH
    	
 
    	
12
    
	
 
	
SECTION 9 FORCE MAJEUR
    	
 
    	
13
    
	
 
	
SECTION 10 MISCELLANEOUS
    	
 
    	
14
    
	
ANNEX 1
    	
 
    	
KEY EMPLOYEES
    	
 
    	
16
    
	
 
	
ANNEX 2
    	
 
    	
MATERIAL CONTRACTS
    	
 
    	
17
    
	
 
	
ANNEX 3
    	
 
    	
MATERIAL CONTRACT TO BE SIGNED
    	
 
    	
18
    
	
 
	
ANNEX 4
    	
 
    	
COMMITMENT LETTER
    	
 
    	
19
    
							

 

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This Share Transfer Framework Agreement (hereinafter referred to as “this Agreement”) is entered into by the duly authorized representatives of the following parties on March 30, 2012 in Beijing:

 

Party A: Zhang Tian

 

ID Card No.: 510202198201305936

Address: Year 2001 undergraduate dormitory, Department of International Relations, No. 5 Summer Palace Road, Haidian District, Beijing

Nationality: Chinese

 

Party B: Xu Heng

 

ID Card No.: 350103198401104910

Address: Year 2002 undergraduate dormitory, Department of International Relations, No. 5 Summer Palace Road, Haidian District, Beijing

Nationality: Chinese

 

Party C: Beijing Xueda Information Technology Co., Ltd., a limited liability company duly incorporated in Beijing and validly existing under the law of PRC with its registered address at Rooms 9506-9508, Building No.3, Block 1, 19 Xinjiekouwai Street, Haidian District, Beijing

 

Legal Representative: Li Rubin

Nationality: Chinese

 

Party D: Chen Li

 

ID Card No.: 110101197606111020

Address: Tongchangzi Hutong, Dongcheng District, Beijing

Nationality: Chinese

 

Party E: Song Junbo

 

ID Card No.: 140502197512043016

Address: 6-1301, Building 32, Tiantongyuan West District, Changping District, Beijing

Nationality: Chinese

 

Party A and Party B are collectively referred to as “Existing Selling Shareholders” and Party C, Party D and Party E are collectively referred to as “Investing Shareholders” under this Agreement. In addition, each party herein is referred to as a “Party”, collectively referred to as “Parties”.

 

WHEREAS:

 

A.      Beijing Weland International Education and Technology Corp. is a company limited by shares, duly incorporated in Beijing and validly existing under the law of PRC, with its registered capital of RMB5.0 million. Its paid-up capital is RMB1.0 million. The unpaid registered capital of RMB4.0 million shall be fully paid on March 30, 2012;

 

B.        As of the date of this Agreement, the Existing Selling Shareholders hold 70% of the equity interest in Weland International, among which, Party A holds 50% of the equity interest in Weland International (its corresponding capital contribution is RMB 2.5 million, of which paid-up capital contribution is RMB0.5 million, and the RMB2.0 million unpaid capital shall be fully paid on March 30, 2012); Party B holds 20% of the equity interest in Weland International (its corresponding capital contribution is RMB1.0 million, of which paid-up capital contribution is RMB0.2 million, the RMB0.8 million unpaid capital shall be fully paid on March 30, 2012);

 

C.        Existing Selling Shareholders and Other Shareholders of Weland International will fulfil their obligations

 

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to contribute the unpaid registered capital of RMB4.0 million to Weland International on March 30, 2012. Existing Selling Shareholders undertake, prior to the share transfer, to restructure Weland International from a company limited by shares to a limited liability company, and Other Shareholders’ Shares can be transferred to them, among which, 18% and 12% of equity interest held by Other Shareholders will be transferred to Party A and Party B, respectively. As a result, upon completion of Other Shareholders’ Share Transfer, Party A and Party B will hold 68% and 32% of the equity interest in Weland International, respectively;

 

D.       Based on Section C above, Party A agrees to transfer 50% equity interest in Weland International (the corresponding capital contribution is RMB2.5 million) it holds to Investing Shareholders in accordance with terms and conditions set out in this Agreement, including the ownership, profit-sharing right, director designating right, assets distributing right and all rights in relation to the foregoing capital contribution entitled to shareholders as stipulated in its articles of association and provided under the law of PRC; Investing Shareholders agree to purchase 50% equity interest in Weland International (the corresponding capital contribution is RMB2.5 million) from Party A in accordance with terms and conditions set out in this Agreement;

 

E.         Party B agrees to transfer 20% equity interest in Weland International (the corresponding capital contribution is RMB1.0 million) to Investing Shareholders in accordance with terms and conditions set out in this Agreement, including the ownership, profit-sharing right, director designating right, assets distributing right and all rights in relation to the foregoing capital contribution entitled to shareholders as stipulated in articles of association and provided under the law of PRC; Investing Shareholders agree to purchase 20% equity interest in Weland International (the corresponding capital contribution is RMB1.0 million) from Party B in accordance with terms and conditions set out in this Agreement;

 

F.         Upon completion of Other Shareholders’ Share Transfer and Share Transfer, Investing Shareholders will hold 70% equity interest in Weland International (the corresponding capital contribution is RMB3.5 million), among which, Party C, Party D and Party E will respectively hold 60%, 7% and 3% equity interest in Weland International; Management Shareholders will hold 30% equity interest in Weland International (the corresponding capital contribution is RMB1.5 million), among which, Party A and Party B will respectively hold 18% and 12% equity interest in Weland International.

 

Through amicable negotiation, the Parties agree upon as follows:

 

Section 1  Definition

 

Unless otherwise stated, the following terms used in this Agreement shall be construed as follows:

 

	
1.1
    	
 
    	
Weland International
    	
 
    	
Beijing   Weland International Education and Technology Corp., a company limited by   shares duly incorporated in Beijing and validly existing under the law of PRC   with its current registration number of 110000012784803.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.2
    	
 
    	
Share Transfer
    	
 
    	
Existing   Selling Shareholders to transfer an aggregate of 70% of equity interest in   Weland International currently held by them (the corresponding capital   contribution is RMB3.5 million) to Investing Shareholders.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.3
    	
 
    	
Transferring Shares
    	
 
    	
An   aggregate of 70% equity interest in Weland International (the corresponding   capital contribution is RMB3.5 million) which Existing Selling Shareholders   currently hold and propose to transfer to Investing Shareholders, including   the ownership, profit-sharing right, director designation right, asset   distributing right and all other rights in relation to the foregoing capital   contribution entitled to shareholders, as stipulated in Weland   International’s articles of association and provided under the law of PRC.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.4
    	
 
    	
Share Transfer Price
    	
 
    	
The   price paid by Investing Shareholders to Existing Selling Shareholders for the   purchase of Transferring Shares, as adjusted from time to time in accordance   with this Agreement.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.5
    	
 
    	
Other Shareholders
    	
 
    	
Shareholders   of Weland International other than the Existing Selling Shareholders.
    

 

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1.6
    	
 
    	
Other Shareholders’ Shares
    	
 
    	
An   aggregate of 30% of equity interest Shareholders in Weland International held   by Other Shareholders.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.7
    	
 
    	
Management Shareholders
    	
 
    	
Existing   Selling Shareholders.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.8
    	
 
    	
Management Shareholders’ Shares
    	
 
    	
Other   Shareholders’ Shares transferred to Existing Selling Shareholders.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.9
    	
 
    	
Other Shareholders’ Share Transfer
    	
 
    	
Other   Shareholders’ Shares to be transferred to Management Shareholders in   accordance with the Share Transfer Agreement with Other Shareholders.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.10
    	
 
    	
Closing Date
    	
 
    	
The   day on which the Parties complete inspection of assets and liabilities of   Weland International in accordance with this Agreement, and Existing Selling   Shareholders handover assets and liabilities of Weland International to   Investing Shareholders. Investing Shareholders will, as controlling   shareholders, obtain the control of Weland International starting from the   Closing Date.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.11
    	
 
    	
Transaction Completion Date
    	
 
    	
The   date on which registration of change with the relevant industry and commerce   authorities is completed with respect to the Share Transfer under this   Agreement.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.12
    	
 
    	
Business Day
    	
 
    	
Any   business day other than statutory holidays in China.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.13
    	
 
    	
Chongqing CTS Beijing Branch
    	
 
    	
The   Beijing Branch of Chongqing China Travel Services (Group) Co., Ltd.
    

 

Section 2  Fundamental Transaction Arrangement

 

2.1                     Share Transfer

 

(1)              Subject to conditions precedent set out in Section 3.1 hereunder, in accordance with terms and conditions in this Agreement, Party A agrees to transfer 50% equity interest in Weland International it holds (the corresponding capital contribution is RMB2.5 million) to Investing Shareholders and Party B agrees to transfer 20% equity interest in Weland International it holds (the corresponding capital contribution is RMB1.0 million) to Investing Shareholders, and Investing Shareholders agree to purchase such 70% equity interest in the aggregate in Weland International (the corresponding capital contribution is RMB3.5 million) from Existing Selling Shareholders.

 

(2)              Upon completion of the above Share Transfer, Investing Shareholders will hold 70% equity interest in Weland International (the corresponding capital contribution is RMB3.5 million).

 

2.2                     Corporate Governance Structure after Share Transfer

 

As of Transaction Completion Date, Investing Shareholders and Management Shareholders will restructure the board of directors of Weland International and appoint a new legal representative, as well as formulate new articles of association. The board of directors shall consist of 7 members, 5 of which shall be jointly designated by Investing Shareholders and 2 of which shall be jointly designated by Management Shareholders. The chairman of board shall be designated by Investing Shareholders. Weland International shall have 3 supervisors, 2 of which shall be jointly designated by Investing Shareholders and 1 of which shall be jointly designated by Existing Selling Shareholders. General manager, vice general manager and financial controller shall be appointed by the board of directors of Weland International. One of the directors designated by Investing Shareholders shall act as the legal representative of Weland International.

 

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Section 3  Share Transfer and Payment Arrangement Related to Share Transfer

 

3.1                     Conditions Precedent to Share Transfer

 

(1)                      Share Transfer and Investing Shareholders’ payment for Share Transfer Price by installments set forth in Section 3.4 hereunder shall be subject to satisfaction of the following conditions:

 

A.              Existing Selling Shareholders and Party C, as representative of Investing Shareholders, shall have entered into a power of attorney, stating that Existing Selling Shareholders authorize Party C, as representative of Investing Shareholders, to exercise the voting rights represented by Transferring Shares from the effective date of this Agreement to Transaction Completion Date; Party C, as representative of Investing Shareholders, shall have, at its discretion, entered into a share pledge agreement, stipulating that Existing Selling Shareholders pledge Transferring Shares to Party C ,as representative of Investing Shareholders, from the effective date of this Agreement to Transaction Completion Date;

 

B.                Existing Selling Shareholders and Other Shareholders shall have fulfilled the obligation to contribute the unpaid registered capital of RMB 4.0 million to Weland International as of March 30, 2012;

 

C.                Weland International shall have been restructured into a limited liability company from a company limited by shares;

 

D.               Existing Selling Shareholders and Other Shareholders shall have entered into a share transfer agreement (the “Share Transfer Agreement”) and have completed registration of change with the relevant industry and commerce authorities with respect to Other Shareholders’ Share Transfer;

 

E.                 Key employees of Weland listed in Annex 1 herein shall have entered into exclusive employment agreements for no less than 3 years and effective as of the Closing Date with Weland International, in the form and substance consistent with market practice and are satisfactory to Investing Shareholders. Such exclusive employment contracts shall include non-competition provisions, setting forth that key employees shall commit not to engage in any business identical to or in competition with those of Weland International during the valid period of their exclusive employment contracts with Weland International and within 2 years from the date they leave office;

 

F.                 Earnings, profits and cash of Chongqing CTS Beijing Branch shall have been transferred to Weland International through contractual arrangements;

 

G.                Investing Shareholders shall have completed legal due diligence and financial audit on Weland International with respect to the Share Transfer. No material adverse changes of business and financial status of Weland International shall have occurred and/or likely to occur. Investing Shareholders shall have found no existing or expected material facts, events and circumstances, which may impede this transaction to proceed or complete. Representations, warranties and covenants made by Existing Selling Shareholders under this Agreement shall be true and correct at the time of making such statements and shall be true and correct as of the Closing Date. All materials, data and relevant information they disclose to Investing Shareholders shall be true, complete and valid without any misrepresentation, concealment or omission of any material fact.

 

(2)                      The Parties hereto shall make their best efforts to accomplish all the above conditions precedent within 30 Business Days from the effective date of this Agreement (“Deadline”).

 

(3)                      In the event that any condition precedent set forth in Section 3.1 has not been accomplished or satisfied by the Deadline, this Agreement will automatically terminate and meanwhile, all rights, obligations and duties of the Parties hereunder shall be null and void and shall cease to be binding upon any Party 

 

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(other than the liability otherwise provided in Section 8.3 and the liability to be assumed by the relevant Party for its breach of this Agreement), unless Investing Shareholders waive such condition precedent or agree to an extension in writing.

 

3.2                     Deposit

 

(1)                      Within three Business Days from the effective date of this Agreement, Investing Shareholders shall pay Existing Selling Shareholders RMB 4.5 million as deposit for Investing Shareholders’ performance of this Agreement. Such deposit shall be remitted into the bank account designated by Existing Selling Shareholders. When Investing Shareholders pay Existing Selling Shareholders the Share Transfer Price in accordance with Section 3.4 hereunder, the foregoing deposit of RMB4.5 million shall be automatically converted into the first installment of Share Transfer Price payable to Existing Selling Shareholders by Investing Shareholders.

 

(2)                      For avoidance of doubt, the provision that the deposit be converted into the first instalment of Share Transfer Price shall not affect the applicability of deposit penalty as set forth in Section 8.2.

 

3.3                     Payment of Share Transfer Price

 

Subject to Section 3.1 and assuming that all representations, warranties and covenants made by Existing Selling Shareholders in this Agreement are true and accurate, the price which Investing Shareholders shall pay Existing Selling Shareholders with respect to Share Transfer is RMB22.0 million, including Share Transfer Price of RMB18.0 million (Share Transfer Price of RMB13.0 million payable to Party A and Share Transfer Price of RMB5.0 million payable to Party B) and reimbursement in the amount of RMB4.0 million for the payment of the unpaid capital of Weland International by the actual contributor on March 30, 2012.

 

3.4                     Payment Arrangements for Share Transfer Price

 

Investing Shareholders shall pay for the Share Transfer Price hereunder as follows:

 

(1)                      Within three Business Days upon satisfaction of Section 3.1(A) and 3.1(B), Investing Shareholders shall remit the first installment of Share Transfer Price of RMB4.5 million into the bank account specified by Existing Selling Shareholders;

 

(2)                      Within five Business Days upon satisfaction of Section 3.1(C) to 3.1(G), Investing Shareholders shall remit the second installment of Share Transfer Price of RMB13.5 million into the bank account specified by Existing Selling Shareholders;

 

(3)                      Within five Business Days from the Completion Date, Investing Shareholders shall reimburse the actual contributor for the payment of unpaid registered capital of Weland International on March 30, 2012, in the amount of RMB4.0 million, into the bank account specified by Existing Selling Shareholders.

 

3.5                     Bank Account

 

Upon execution of this Agreement, Existing Selling Shareholders shall, in written form, notify Investing Shareholders of the bank account information for receiving deposit and instalments of Share Transfer Price, including, but not limited to name of bank, account name and account number, etc.

 

Section 4  Handover

 

4.1                       Upon Investing Shareholders’ payment of the first installment of Share Transfer Price to Existing Selling Shareholders, Investing Shareholders may organize and authorize the relevant staff to access to the domicile and other relevant properties of Weland International and to conduct various inspection upon the assets and liabilities of Weland International, and conduct handover related to Weland International with the relevant officers of Weland International. Items subject to such inspection and handover include, but not limited to:

 

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(1)              Original seal, chop and business license, organization code certificate and tax registration certificate, etc. of Weland International;

 

(2)              All personal property owned by Weland International (including production tools, equipment, office furnishings and related devices, computers, telephones, fax machines, copiers and other office equipment and transportation vehicles, cash, various forms of bank deposits and inventory);

 

(3)              Original contracts in connection with the business Weland International engages in, as stated on its business license, including any contract, agreement, covenant and any amendment, revision or supplement thereto, signed by Weland International prior to the Closing Date, but not limited to contracts, insurance policies with respect to sales, raw material supply, borrowing, purchase of personal property, lease and other contracts, agreements, covenants, commitment letters, guarantee letters, letters of credit, bills of lading, invoices, variety of bills and any other legal instruments;

 

(4)              Original documents and material of Weland International in connection with its business, including, but not limited to, business records, financial and accounting records, operation records, statistical data, specifications, maintenance manuals, training manuals, feasibility study reports, promotional brochures, governmental approvals and other documents and materials;

 

(5)                Earnings, profits and cash transferred to Weland International from Chongqing CTS Beijing Branch.

 

4.2                       Any agreement, contract, arrangement, guarantee, compensation or deal (any “Deal”), which shall be continuously assumed and performed by Weland International after the Closing Date, will be continuously performed by Weland International after the Closing Date. With respect to any cooperation agreement with domestic and overseas education institutions for raw material procurement, equipment parts procurement, products sales, employment services, and any other Deal related to Weland International’s business (whether such Deal is agreed in writing), Investing Shareholders shall be entitled to select to continue to perform,  cease to perform, or continue to perform on revised terms, based on Weland International’s business needs and the principle of equity, Existing Selling Shareholders shall actively cooperate with Investing Shareholders upon their requests. Any liabilities or penalties for breach of agreement arising out of termination of such Deal or revision of commercial terms for such Deal shall be borne by Existing Selling Shareholders.

 

4.3                       The Parties agree, with respect to the employment agreements entered into by and between the remaining Weland International’s existing employees (other than key employees listed in Annex 1 hereto) and Weland International, Weland International will continue to perform in accordance with terms of such employment agreements.

 

4.4                       The mandatory social insurance, mandatory employee welfare, housing fund, unpaid payroll, bonus, welfare, which shall be paid by Weland International for its existing employees prior to the Closing Date (the “Weland International’s Existing Employees”) and late fee, fine, penalty, damages or any other similar fee likely to arise out of late payment of the foregoing shall be borne by Existing Selling Shareholders. If Weland International bears costs and expenses with respect to the matters above after the Closing Date, Investing shareholders shall be entitled to deduct 70% of the amount equivalent to such costs and expenses from the Share Transfer Price.

 

4.5                       The Parties hereto shall register and record the handover up to the Closing Date under this Section 4 on the Closing Date, and such record shall be signed and confirmed by duly authorized representatives of the Parties.

 

4.6                      Without prejudice to the Deadline set forth in Section 3.1(2) hereunder and Investing Shareholders’ rights accordingly, Weland International shall complete the registration of change with the relevant industry and commerce authorities in connection with the Share Transfer within twenty Business Days from the Closing Date. For avoidance of doubt, if such procedure fails to be completed within twenty Business Days due to requirements stipulated by the industry and commerce authorities, such period shall be extended accordingly.

 

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During this period, Existing Selling Shareholders shall actively cooperate with Weland International to complete such procedure.

 

Section 5  Adjustment on Closing Date

 

5.1                     Assets and Liabilities of Weland International

 

(1)          Existing Selling Shareholders acknowledge, as of March 20, 2012, unaudited assets of Weland International stated in its financial statements is cash and cash equivalent: RMB4,865,204.74, notes receivable: RMB0.00, inventory: RMB0.00, other receivables: RMB16,100, prepayment: RMB2,120, fixed assets: RMB24,372.57, long-term deferred cost: RMB 0.00; In addition to Weland International’s assets above, as of March 20, 2012, unaudited assets of Chongqing CTS Beijing Branch, which is actually controlled by Weland International, is cash and cash equivalent: RMB2,214,349.3, notes receivable: RMB0.00, inventory: RMB0.00, other receivable: RMB16,100, prepayment: RMB380,000, fixed assets: RMB4,637.55 and long-term deferred cost: RMB 0.00.

 

(2)          Existing Selling Shareholders acknowledge, as of March 20, 2012, unaudited liabilities of Weland International stated in its financial statements is RMB317,619.51 in total, among which, accounts payable of RMB0.00, advancements of RMB286,150, other payables of RMB0.00; In addition to Weland International’s liabilities above, as of March 20, 2012, unaudited liabilities of Chongqing CTS Beijing Branch set out in its financial statements is RMB218,550, among which, accounts payable of RMB0.00, receipts in advance of RMB218,550, other payables of RMB0.00.

 

(3)          The Parties hereto shall determine the ownership and disposal of the assets and liabilities above in accordance with Sections 5.2 to 5.4 hereunder with respect to the assets owned and liabilities assumed by Weland International and Chongqing CTS Beijing Branch, which is actually controlled by Weland International.

 

5.2                     Ownership and Disposal of Assets

 

(1)                        From January 1, 2012 to the Closing Date, current assets owned by Weland International, including cash and cash equivalent (inventory cash and bank deposit), inventories (raw materials and finished products, but excluding spares for production and operation facilities) shall be owned by Weland International. Existing Selling Shareholders may not distribute or retrieve such current assets from Weland International in any form or manner prior to completion of Share Transfer.

 

(2)                        Transfer of assets owned by Chongqing CTS Beijing Branch from January 1, 2012 up to the Closing Date to Weland International shall be completed through relevant contracts as soon as possible after the Closing Date.

 

5.3                     Ownership and Disposal of Credit and Debt

 

With respect to all credit formed by Weland International and Chongqing CTS Beijing Branch, Existing Selling Shareholders shall be responsible to ensure the debtors of such credit timely and fully repay to Weland International and Chongqing CTS Beijing Branch in accordance with the relevant agreements and provisions under the law. If the relevant debtors fail to timely and fully repay to Weland International and Chongqing CTS Beijing Branch, Investing Shareholders shall be entitled to deduct the amount equivalent to 70% of such unliquidated credit from the Share Transfer Price.

 

5.4                     Ownership and Disposal of Earnings and Profits

 

(1)                        From January 1, 2012 up to the Closing Date, earnings, profits and cash set out in Weland International’s financial accounts shall be owned by Weland International, Existing Selling Shareholders may not distribute or withdraw such earnings, profits and cash from Weland International in any form or manner prior to completion of the Share Transfer.

 

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(2)                        From January 1, 2012 up to the Closing Date, earnings, profits and cash set out in the financial accounts of Chongqing CTS Beijing Branch shall be transferred to Weland International by Chongqing CTS Beijing Branch through the relevant contracts. Upon completion of such transfer, Existing Selling Shareholders may not distribute or withdraw such earnings, profits or cash from Weland International in any form or manner prior to completion of the Share Transfer.

 

Section 6  Effect

 

This Agreement shall be legally binding upon the Parties since it is signed by the respective legal representatives or duly authorized representatives of the Parties.

 

Section 7  Representations and Warranties; Covenants

 

7.1                    Representations, Warranties and Covenants of Existing Selling Shareholders

 

Existing Selling Shareholders unconditionally and irrevocably represent, warrant and covenant to Investing Shareholders:

 

(1)              Existing Selling Shareholders have full capacity for civil rights and civil capacity to enter into this Agreement and exercise their rights and fulfill their obligations hereunder.

 

(2)              Existing Selling Shareholders’ execution of this Agreement and exercise of their rights and fulfillment of their obligations hereunder will not breach or violate any law, court judgment, arbitration award, administrative decision or contractual restriction, which is binding upon them or has effect upon them; This Agreement, since its effective date, constitutes a legal, valid and binding obligation of them, enforceable against them in accordance with its terms.

 

(3)              Transferring Shares to be transferred to Investing Shareholders hereunder is fully, validly and legally owned by Existing Selling Shareholders. Transferring Shares are free and clear of any third party rights, mortgage, guarantee and other security interest.

 

(4)              Existing Selling Shareholders warrant that, upon completion of this Share Transfer, Weland International will have enough assets to support its normal business operation, provided that, upon completion of this Share Transfer, material changes to Weland International’s normal business operation decided by Investing Shareholders may result in insufficiency of assets.

 

(5)              Existing Selling Shareholders warrant that , Weland International, as a party to material contracts listed in Annex 2 hereto, has properly performed and complied in all material respects with each of its obligations thereunder prior to the Closing Date. There is no ground, which will cause such material contracts to be declared null, cancelled, rescinded or terminated. Existing Selling Shareholders and/or Weland International has not received any notice of canceling, rescinding or terminating such material contracts. Such material contracts can all be renewed in accordance with their existing terms and conditions.

 

(6)              All documents, materials or documentary evidence provided by Existing Selling Shareholders to Investing Shareholders during negotiation and execution of this Agreement are true and valid, including financial statements, which fairly and completely reflect its financial status, without any omission, concealment, alternation, forgery, misrepresentation or fraud.

 

(7)              Weland International’s financial statements mentioned in Section 5.1 hereunder (Assets and Liabilities of Weland International) are prepared in accordance with laws and regulations of the PRC, fairly reflecting Weland International’s financial conditions as of the date of statements and the corresponding period, without any material omission or inaccuracy with respect to income, expenditure, assets or liabilities.

 

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(8)             Weland International has no debt overdue and payable under normal circumstances and (as original creditor or assignee) also has no credit overdue and unrealizable. Existing Selling Shareholders shall at any time unconditionally settle any debt of Weland International existing prior to the Closing Date, which is not disclosed to Investing Shareholders. Any loss suffered by Weland International or Investing Shareholders arising out of such debt shall be immediately, unconditionally compensated in full by Existing Selling Shareholders. If Existing Selling Shareholders fail to timely and fully compensate such debt in accordance with the foregoing provision, Investing Shareholders are entitled to deduct the amount equivalent to such debt assumed by Weland International from the Share Transfer Price and retain the right to pursue legal actions against Existing Selling Shareholders.

 

(9)             Assets and liabilities set out in Section 5.1 hereunder (Assets and Liabilities of Weland International) constitute all of Weland International’s assets and liabilities. Other than such asset and liabilities, Weland International has no off-balance-sheet-debt or guarantee which is not stated in Weland International’s financial statements.

 

(10)      Existing Selling Shareholders will issue a commitment letter substantially in the form and substance set out in Annex 4 hereto, undertaking that upon receipt of the Share Transfer Price paid by Investing Shareholders, in accordance with the Individual Income Tax Law and other relevant laws, regulations and regulatory documents (the “Tax Laws”), they will conduct self-declaration and pay the relevant taxes payable under the Tax Laws with respect to the Share Transfer Price of RMB 18.0 million they obtain. Upon Investing Shareholders’ request, they shall provide Investing Shareholders with tax clearance receipt for Existing Selling Shareholders’ declaration and payment of such taxes.

 

7.2                    Representations, Warranties and Covenants of Investing Shareholders

 

Investing Shareholders unconditionally and irrevocably represent, warrant and covenant to Existing Selling Shareholders:

 

(1)             Party C, a corporate legal person as an Investing Shareholder, is a corporate legal person duly incorporated and validly existing under the law of PRC, has full capacity for civil rights and civil capacity to enter into this Agreement and exercise its rights and fulfill its obligations hereunder; Party D and Party E, natural persons as Investing Shareholders, both have full capacity for civil rights and civil capacity to enter into this Agreement and exercise their rights and fulfill their obligations hereunder.

 

(2)             The execution of and performance of this Agreement by Party C and its authorized representative hereunder fall within its corporate powers and business scope, have been internally authorized and will not breach or violate any law, court judgment, arbitration award, administrative decision and contractual restriction binding upon or has effect upon them; This Agreement, from the date it takes effect, constitutes a legal, valid and binding obligation of Party C and its authorized representative, enforceable against them in accordance with its terms.

 

(3)             The fund source for Investing Shareholders designed to pay for the Share Transfer Price is legal and Investing Shareholders will timely and fully pay for the Share Transfer Price to Existing Selling Shareholders in accordance with payment of Share Transfer Price under this Agreement.

 

(4)             Investing Shareholders covenant that, after the Transaction Completion Date, other than the customary capital increase to Weland International via Weland International’s retained earnings, any capital increase to Weland International (including capital increase to Weland International by Investing Shareholders and Management Shareholders in cash and capital increase to Weland International through introduction of third party investors) shall be unanimously agreed by Investing Shareholders and Management Shareholders.

 

(5)             Investing Shareholders covenant that, subject to Weland International’s satisfaction of the customary qualified initial public offering within five years of the Transaction Completion Date, but failure to complete such qualified initial public offering within such five years, if, during the fourth year and the fifth year of the Transaction Completion Date, the annual after-tax profits of Weland International for

 

11

 

any of such two years is over RMB30.0 million, Investing Shareholders shall be obligated to accept Management Shareholders’ proposal to acquire the equity interest held by the Management Shareholders in Weland International based on the valuation of Weland International which is calculated to be six times the average of the after-tax net profits of the year with annual profits after tax reaching RMB30.0 million and its previous year.

 

(6)             Investing Shareholders covenant that, after the Transaction Completion Date, will ensure themselves and their affiliates (not including Weland International and any of its subsidiary, the same as below), as long as they hold equity interest in Weland International, not to engage in the Model United Nations Projects, which Weland International is carrying out, will not engage in any study tour project in connection with both the material contracts as listed in Annex 2 hereto which Weland International is carrying out, has run smoothly and material contracts to be signed by Weland International as listed in Annex 3 hereto; After the Transaction Completion Date, Investing Shareholders and Existing Selling Shareholders will establish a mechanism for negotiation and communication of business in order to prevent Investing Shareholders themselves and their affiliates from engaging in any new study tour project and new business which has been approved by the board of directors of Weland International and further to enable the study tour projects Investing Shareholders and their affiliates engage in to be different from and complementary with those study tour projects Weland International engages in.

 

Section 8  Termination of Agreement and Liability for Breach

 

8.1                     Except otherwise provided herein, if any Party does not perform or breach any terms and conditions, representations, warranties or covenants made by it herein, the other Parties shall be entitled to demand the non-performing party or breaching party to compensate for any and all direct losses, damages suffered by them and the resulting actions, claims and other costs and expenses arising out of such Party’s non-performance or breach.

 

8.2                     Deposit Penalties

 

If either of Investing Shareholders (collectively as one party) or Existing Selling Shareholders (collectively as one party) terminates performance of this Agreement without cause or causes inability to perform this Agreement due to its breach, the non-defaulting party shall be entitled to demand the defaulting party to assume the liability for breach with respect to the deposit set out in Section 3.3 hereunder in accordance with the relevant provisions of the Contract Law of PRC, namely if the defaulting party is Existing Selling Shareholders who receive the deposit, Existing Selling Shareholders shall refund double deposit to the Investing Shareholders who deliver the deposit; if the defaulting party is Investing Shareholders who deliver the deposit, Investing Shareholders shall forfeit the right to demand Existing Selling Shareholders who receive the deposit to refund the deposit.

 

8.3                     Termination

 

(1)         Termination Circumstances

 

This Agreement can be terminated at any time prior to the Closing under any of the following circumstances:

 

A.                This Agreement can be terminated by Investing Shareholders, if: (i) occurrence of certain events or situations causing the conditions set out in Section 3.1 (Conditions Precedent) unable to be satisfied by the Deadline; (ii) breach of any representation, warranty or covenant causing the conditions set out in Section 3.1 (Conditions Precedent) unable to be satisfied and such breach is unable to be rectified at Investing Shareholders’ reasonable discretion; (iii) Existing Selling Shareholders’ non-compliance with the covenants and agreements which they are obligated to comply with, causes the conditions set out in Section 3.1 (Conditions Precedent) unable to be satisfied and such non-compliance is unable to be rectified at Investing Shareholders’ reasonable discretion; (iv) Existing Selling Shareholders conduct overall assignment of any material asset of Weland International for the benefits of creditors or Existing

 

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Selling Shareholders file any legal proceedings or any legal proceeding is filed against Weland International under any law related to bankruptcy, insolvency or restructuring, for the purpose of declaration of Weland International’s bankruptcy or insolvency or liquidation, reorganization, exemption or debt restructuring. For avoidance of doubt, if this Agreement is terminated by Investing Shareholders due to circumstances set out in Section 8.3(1)A, Existing Selling Shareholders shall refund the relevant amount related to Share Transfer they have received from Investing Shareholders until the date Investing Shareholders announce termination of this Agreement in accordance with Section 3.4 hereunder to Investing Shareholders; the power of attorney and share pledge agreement mentioned in Section 3.1(1)A shall terminate concurrently with Investing Shareholders’ receipt of such amount related to Share Transfer.

 

B.                Existing Selling Shareholders or Investing Shareholders mutually agree to terminate this Agreement.

 

(2)         Effect of Termination

 

If this Agreement is terminated in accordance with this Section 8.3, this Agreement will be null and void. Except provided in Section 8.3(1) A, any Party hereto shall not assume any liability; No provisions herein shall exempt any Party hereto from the liability for breach of this Agreement.

 

8.4                     At any time after the Closing Date, Existing Shareholders shall compensate Investing Shareholders and/or Weland International in accordance with Section 8.5 hereunder for any economic losses suffered by Investing Shareholders and/or Weland International after the Closing Date arising out of the events, including, but limited to:

 

(1)             Weland International is required to settle liabilities which should have been disclosed, but was not disclosed in the financial statements as of the Closing Date;

 

(2)             Weland International’s contingent liabilities arising out of any cause prior to the Closing Date. In this Agreement, the foregoing “contingent liabilities” shall have the same definition as defined in the Accounting Standards for Enterprises No. 13 — Contingencies;

 

(3)             Weland International’s all taxes payable, tax fines, penalty interest, late fees and similar fees arising out of any cause prior to the Closing Date;

 

(4)             Any suit, arbitration or administrative penalty against Weland International arising out of any cause prior to the Closing Date;

 

(5)             Any other non-performance or breach of any terms and conditions hereunder.

 

8.5                    In case of any event set out in Section 8.4, Investing Shareholders shall be entitled to, within five Business Days of occurrence of such event, firstly, directly deduct the amount equivalent to the actual losses from the unpaid Share Transfer Price. If the amount of Share Transfer Price unpaid to Existing Selling Shareholders is not sufficient to set off the actual losses mentioned above,

 

(1)             Existing Selling Shareholders shall use Weland International’s profits available for distribution to shareholders that they are entitled to compensate Investing Shareholders or Weland International;

 

(2)             If the amount of profits available for distribution to shareholders mentioned above is still insufficient to compensate Investing Shareholders or Weland International for the losses, based on the amount of losses uncompensated to Investing Shareholders, Existing Selling Shareholders shall compensate Investing Shareholders with the equity interest in Weland International corresponding to capital contribution equivalent to the amount of such losses.

 

13

 

Section 9  Force Majeur

 

9.1                     A force majeure event shall mean an unavoidable and unpreventable event which is unpredictable when the Parties hereto enter into this Agreement, and cause a Party in part or in whole unable to perform any term under this Agreement. A force majeure event includes earthquake, typhoon, flood, fire, war, and any other similar event, which can not be foreseen, avoided or overcome, including the event recognized as force majeure event in the general international commercial practice.

 

9.2                     In case of occurrence of any force majeur event, the affected Party can suspend its performance of obligations hereunder for the duration of such force majeur event, which shall not be deemed as breach of this Agreement, provided that, the affected Party shall forthwith notify the other Parties in writing of the event and provide the other parties with the relevant proofs evidencing the occurrence and/or existence of such force majeur event in accordance with the law of PRC. Failure to do so will cause the event not to be deemed as force majeur.

 

9.3                     In case of any force majeur event, the Parties hereto shall immediately negotiate and attempt to resolve reasonably and fairly, and shall use their reasonable efforts to minimize the adverse effect of such force majeur event on the performance of this Agreement.

 

Section 10  Miscellaneous

 

10.1              Governing Law

 

This Agreement shall be governed by the law of PRC and any dispute in connection with or arising out of the existence, validity, construction and performance of this Agreement shall be governed by the law of PRC. However, if there is no relevant provision under PRC law, general international commercial practice shall apply as reference.

 

10.2              Dispute Settlement

 

The Parties shall firstly try to resolve any dispute in connection with the interpretation or performance of this Agreement through amicable negotiation.

 

If failing to be resolved through negotiation, any dispute or claim arising out of this Agreement shall be submitted to China International Economic and Trade Arbitration Commission Beijing Branch for arbitration in Shanghai in accordance with its arbitration rules current in force at the time of application for arbitration. The arbitration rules shall be deemed as part of this section and the arbitration award shall be final and binding upon the parties.

 

10.3              Amendment and Supplement

 

This Agreement shall constitute the entire agreement by and between the Parties with respect to Share Transfer and supersede any and all written or oral arrangements with respect to the Share Transfer hereunder. Any amendment or supplement to this Agreement must be in writing and shall take effect upon execution by the Parties. Any amendment and supplement to this Agreement shall be deemed as an integral part of this Agreement.

 

10.4              Language and Version

 

This Agreement is made and signed in Chinese with eight (8) originals. Each copy of originals shall be the same authentic and each party hereto holds one (1) copy, the remaining copies will be used for registration with the relevant authorities and for Weland International’s record.

 

14

 

10.5              Tax

 

All taxes arising out of the Share Transfer hereunder shall be declared and paid in accordance with the law of PRC. The Parties hereto shall respectively declare and pay all their taxes with respect to their execution and performance of this Agreement in accordance with requirements of the Tax Laws.

 

[The remainder of this page is intentionally left blank.]

 

15

 

[Signature page]

 

 

Zhang Tian

 

	
Signature:
    	
/s/Zhang Tian
    	
 
    

 

Date of Signing: March 30, 2012

 

 

Xu Heng

 

	
Signature:
    	
/s/Xu Heng
    	
 
    

 

Date of Signing: March 30, 2012

 

 

Beijing Xueda Information Technology Co., Ltd.

 

	
Authorized Signatory:
    	
/s/Xin Jin
    	
 
    

 

Date of Signing: March 30, 2012

 

 

Chen Li

 

	
Signature:
    	
/s/Chen Li
    	
 
    

 

Date of Signing: March 30, 2012

 

 

Song Junbo

 

	
Signature:
    	
/s/Song Junbo
    	
 
    

 

Date of Signing: March 30, 2012

 

16

 

Annex 1                 Key Employees

 

	
No.
    	
 
    	
Name
    	
 
    	
Original Position
    
	
1.
    	
 
    	
Zhang Tian
    	
 
    	
Chairman
    
	
2.
    	
 
    	
Xu Heng
    	
 
    	
General Manager
    

 

17

 

Annex 2                 Material Contracts

 

As of the date of this Agreement, material contracts, which have been signed by Weland International, include:

 

	
No.
    	
 
    	
Contract
   Name
    	
 
    	
Counter party (ies)
    	
 
    	
Date of
   Signing
    	
 
    	
Term
    	
 
    	
Main Content
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

18

 

Annex 3                 Material Contract to be Signed

 

As of the date of this Agreement, material contracts to be signed by Weland International include:

 

	
No.
    	
 
    	
Project Name
    	
 
    	
Project Date
    
	
1.
    	
 
    	
ILMUNC
    	
 
    	
summer holidays, 2012
    
	
2.
    	
 
    	
MUNUC
    	
 
    	
summer holidays, 2012
    
	
3.
    	
 
    	
YMUN
    	
 
    	
summer holidays, 2012
    
	
4.
    	
 
    	
BosMUN
    	
 
    	
summer holidays, 2012
    
	
5.
    	
 
    	
BMUN
    	
 
    	
summer holidays, 2012
    
	
6.
    	
 
    	
MITMUNC
    	
 
    	
summer holidays, 2012
    
	
7.
    	
 
    	
AIMUN
    	
 
    	
summer holidays, 2012
    
	
8.
    	
 
    	
NAIMUN
    	
 
    	
winter holidays, 2013
    
	
9.
    	
 
    	
MUNUC
    	
 
    	
winter holidays, 2013
    
	
10.
    	
 
    	
YMUN
    	
 
    	
winter holidays, 2013
    
	
11.
    	
 
    	
HMUN
    	
 
    	
winter holidays, 2013
    
	
12.
    	
 
    	
BosMUN
    	
 
    	
winter holidays, 2013
    

 

19

 

Annex 4                 Commitment Letter

 

To: Investing Shareholders

 

With respect to tax declaration and payment in connection with the Share Transfer under the Individual Income Tax Law and other relevant laws, regulations and regulatory documents (the “Tax Laws”), Zhang Tian and Xu Heng, as Weland International’s Existing Selling Shareholders, hereby commit to Investing Shareholders as follows:

 

1.              As Existing Selling Shareholders, upon receipt of the Share Transfer Price paid by Investing Shareholders, in accordance with Tax Laws, we will conduct self-declaration and pay the relevant taxes payable under the Tax Laws with respect to the Share Transfer Price we receive from Investing Shareholders.

 

2.              Upon Investing Shareholders’ request, we will provide Investing Shareholders with tax clearance receipts for Existing Selling Shareholders’ declaration and payment of such taxes;

 

3.              If any fine or penalty is imposed upon Investing Shareholders arising out of our failure to declare and pay taxes under the Tax Laws, we will compensate Investing Shareholders in full for any losses suffered by them therefrom.

 

 

	
 
    	
Zhang Tian
    
	
 
    	
Signature:
    	
/s/Zhang Tian
    
	
 
    	
Date of Signing:   March 30, 2012
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Xu Heng
    
	
 
    	
Signature:
    	
/s/Xu Heng
    
	
 
    	
Date of Signing:   March 30, 2012
    

 

20Exhibit 10.15

 

GEORGETOWN SAVINGS BANK

CHANGE-IN-CONTROL AGREEMENT

 

 

THIS CHANGE-IN-CONTROL AGREEMENT (the “Agreement”) is made effective this    9th  day of         November          , 2011 (the “Effective Date”), between Georgetown Savings Bank, a federally chartered savings bank with its principal office in Georgetown, Massachusetts (the “Bank”), and Philip J. Bryan  (“Executive”).  For purposes of this Agreement, any references to the “Company” shall mean Georgetown Bancorp, Inc., the stock holding company of the Bank.

 

WITNESSETH

 

WHEREAS, Executive has accepted employment with the Bank in the position of Senior Vice President/Chief Loan Officer (the “Executive Position”);

 

WHEREAS, the Bank desires to be ensured of Executive’s active participation in the business of the Bank; and

 

WHEREAS, in order to induce Executive to continue employment with the Bank and to provide further incentive to achieve the financial and performance objectives of the Bank, the parties desire to specify the severance benefits which shall be due Executive in the event that his employment with the Bank is terminated under specified circumstances in connection with or following a change in control of the Bank and/or the Company.

 

NOW THEREFORE, in consideration of the mutual agreements herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:

 

1.         Definitions.  The following words and terms shall have the meanings set forth below for the purposes of this Agreement:

 

(a)        Annual Base Salary.  Executive’s “Base Salary” for purposes of this Agreement shall mean the base salary paid to Executive by the Bank (i) during the calendar year in which the Date of Termination occurs (determined on an annualized basis), or (ii) the calendar year immediately preceding the calendar year in which the Date of Termination occurs, whichever is greater.

 

(b)        Cause.  Termination of Executive’s employment for “Cause” shall mean termination because of personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order.  Executive’s employment shall not be terminated for “Cause” in accordance with this paragraph for any act or action or failure to act which is undertaken or omitted in accordance with a resolution of the Bank’s board of directors (“Board of Directors”) or upon advice of the Bank’s counsel.

 

 

(c)        Change in Control.  For purposes of this Agreement, a “Change in Control” shall mean any of the following events:

 

(i)         Merger:  The Company or the Bank merges into or consolidates with another entity, or merges another bank or corporation into the Bank or the Company, and as a result, less than a majority of the combined voting power of the resulting corporation immediately after the merger or consolidation is held by persons who were stockholders of the Company or the Bank immediately before the merger or consolidation, provided, however, that a second step conversion of the Company’s mutual holding company is specifically excluded from consideration as a Change in Control under this definition;

 

(ii)        Acquisition of Significant Share Ownership:  There is filed, or is required to be filed, a report on Schedule 13D or another form or schedule (other than Schedule 13G) required under Sections 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended, if the schedule discloses that the filing person or persons acting in concert has or have become the beneficial owner of 25% or more of a class of the Company’s or the Bank’s voting securities; provided, however, this clause (ii) shall not apply to beneficial ownership of the Company’s or the Bank’s voting shares held in a fiduciary capacity by an entity of which the Company directly or indirectly beneficially owns 50% or more of its outstanding voting securities;

 

(iii)       Change in Board Composition:  During any period of two consecutive years, individuals who constitute the Company’s or the Bank’s Board of Directors at the beginning of the two-year period cease for any reason to constitute at least a majority of the Company’s or the Bank’s Board of Directors; provided, however, that for purposes of this clause (iii), each director who is first elected by the board (or first nominated by the board for election by the stockholders or corporators) by a vote of at least two-thirds (2/3) of the directors who were directors at the beginning of the two-year period or who is appointed to the Board as the result of a directive, supervisory agreement or order issued by the primary federal regulator of the Company or the Bank or by the Federal Deposit Insurance Corporation (“FDIC”) shall be deemed to have also been a director at the beginning of such period; and provided, further, that the elimination of the Company’s board of directors by merger into a new stock holding company in connection with a second-step conversion of the Company’s mutual holding company shall not be deemed a Change in Control if the Bank’s Board of Directors continues to satisfy this requirement; or

 

(iv)       Sale of Assets:  The Company or the Bank sells to a third party all or substantially all of its assets.

 

(d)        Code.  “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

2

 

(e)        Date of Termination.  “Date of Termination” shall mean (i) if Executive’s employment is terminated for Cause, the date on which the Notice of Termination is given, and (ii) if Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination.

 

(f)         Good Reason.  Termination by Executive of Executive’s employment for “Good Reason” shall mean termination by Executive following a Change in Control based on:

 

(i)         the failure to elect or reelect or to appoint or reappoint Executive to the Executive Position, unless consented to by Executive;

 

(ii)        a substantial adverse and material change in Executive’s function, duties, or responsibilities;

 

(iii)       a substantial and material reduction in Annual Compensation or benefits of Executive from those being provided immediately prior to the Change in Control (except for any reduction that is part of an employee-wide reduction in pay or benefits);

 

(iv)       a liquidation or dissolution of the Bank;

 

(v)        material breach of this Agreement by the Bank; or

 

(vi)       a relocation of Executives principal place of employment more than twenty five (25) miles from its location immediately prior to the Change in Control.

 

Upon the occurrence of any event described in clauses (i) through (vi) above, Executive shall have the right to elect to terminate his employment under this Agreement by resignation within a reasonable time not to exceed ninety (90) days after the initial event giving rise to said right to elect; provided, however, that the Bank has thirty (30) days to remedy any event described in clauses (i) through (vi) above, but the Bank may waive such cure period and make an immediate payment hereunder.

 

(g)        Notice of Termination.  Any purported termination of Executive’s employment in connection with or following a Change in Control for any reason, including without limitation for Cause, or by Executive for any reason, including without limitation due to Retirement or for Good Reason, shall be communicated by written “Notice of Termination” to the other party hereto.  For purposes of this Agreement, a “Notice of Termination” shall mean a dated notice which (i) indicates the specific reasons for termination, (ii) in the event of a termination for Good Reason sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment, and (iii) specifies a Date of Termination, which shall be not less than thirty (30) nor more than ninety (90) days after such Notice of Termination is given, except in the case of the Bank’s termination of Executive’s employment for Cause, which shall be effective immediately; and (iv) is given in the manner specified in Section 11 hereof.

 

3

 

(h)        Retirement.  “Retirement” shall mean termination of Executive’s employment at age 65 or in accordance with any retirement policy established with Executive’s consent with respect to him.  Upon termination of Executive upon Retirement, no amounts or benefits shall be due Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Bank and other plans to which Executive is a party.

 

(i)         Separation from Service.  “Separation from Service” means Executive’s death, Retirement, or other termination of employment by the Bank.

 

No Separation from Service shall be deemed to occur due to military leave, sick leave or other bona fide leave of absence if the period of such leave does not exceed six months or, if longer, so long as Executive’s right to reemployment is provided by law or contract.  If the leave exceeds six months and Executive’s right to reemployment is not provided by law or by contract, then Executive shall have a Separation from Service on the first date immediately following such six-month period.

 

Executive shall not be treated as having a Separation from Service if Executive provides more than insignificant services for the Bank following Executive’s actual or purported termination of employment with the Bank.  Services shall be treated as more than insignificant if such services are performed at an annual rate that is at least equal to 20% of the services rendered by the Executive for the Bank, on average, during the immediately preceding three full calendar years of employment (or if employed less than three years, such shorter period of employment) and the annual base compensation for such services is at least equal to 20% of the average base compensation earned during the final three full calendar years of employment (or if employed less than three years, such shorter period of employment).

 

Where Executive continues to provide services to a previous employer in a capacity other than as an employee, a Separation from Service will not be deemed to have occurred if Executive is providing services at an annual rate that is 50% or more of the services rendered, on average, during the immediate preceding three full calendar years of employment (or if employed less than three years, such lesser period) and the annual base compensation for such services is 50% or more of the annual base compensation earned during the final three full calendar years of employment (or if less, such lesser period).

 

2.         Term of Agreement.  The term of this Agreement shall be for twelve (12) months, commencing on the Effective Date.  Commencing on the first anniversary of the Effective Date, and on each annual anniversary thereafter, the term of this Agreement may be extended for an additional twelve (12) months so that the remaining term shall be twelve (12) months from said anniversary date, provided that, not less  than thirty (30) days prior to such anniversary date, the President and Chief Executive Officer of the Bank performs a comprehensive evaluation of the Executive’s performance and recommends the Agreement for renewal to the Board of Directors (“Board”) of the Bank and the Board approves the renewal of the Agreement.  If the Board elects not to renew the Agreement, the Board  shall give notice in accordance with Section 11 hereof of a determination not to extend the term of this Agreement.  Such written notice of the election not to extend shall be given prior to any such anniversary date, and if given, this Agreement shall terminate on such anniversary date.  References herein to the term of this Agreement shall refer both to the initial term and successive terms.

 

4

 

Notwithstanding anything herein to the contrary, if this Agreement is in effect on the effective date of a Change in Control, this Agreement will automatically renew on such effective date and shall expire twelve (12) months following the effective date of the Change in Control.

 

3.         Benefits Upon Termination.  If Executive’s employment by the Bank is terminated subsequent to a Change in Control and during the term of this Agreement by (i) the Bank for any reason other than Cause, or Executive’s death or (ii) Executive for Good Reason, then the Bank shall:

 

(a)        pay to Executive, in a lump sum as of the Date of Termination, a cash severance amount equal to one (1) times Executive’s Annual Base Salary, and

 

(b)        Notwithstanding any provision to the contrary herein, and to the extent necessary to comply with Code Section 409A, if applicable, no payment shall be made to Executive pursuant to this Agreement until such time as Executive has a Separation from Service.

 

4.         Limitation of Benefits under Certain Circumstances.  If the payments and benefits pursuant to Section 3 hereof, either alone or together with other payments and benefits which Executive has the right to receive from the Bank, would constitute a “parachute payment” under Section 280G of the Code, the payments and benefits payable by the Bank pursuant to Section 3 hereof shall be reduced, in the manner determined by Executive, by the amount, if any, which is the minimum necessary to result in no portion of the payments and benefits payable by the Bank under Section 3 being non-deductible to the Bank pursuant to Section 280G of the Code and subject to the excise tax imposed under Section 4999 of the Code.  The determination of any reduction in the payments and benefits to be made pursuant to Section 3 shall be based upon the opinion of the Bank’s independent public accountants.

 

5.         No Mitigation; Exclusivity of Benefits.

 

(a)        Executive shall not be required to mitigate the amount of any benefits hereunder by seeking other employment or otherwise.  The amount of severance to be provided pursuant to Section 3(a) hereof shall not be reduced by any compensation earned by Executive as a result of employment by another employer after the Date of Termination or otherwise.

 

(b)        The specific arrangements referred to herein are in addition to and not intended to exclude any other benefits which may be available to Executive upon a termination of employment with the Bank pursuant to employee benefit plans of the Bank or otherwise.

 

6.         Withholding.  All payments required to be made by the Bank hereunder to Executive shall be subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the Bank may reasonably determine should be withheld pursuant to any applicable law or regulation.

 

7.         Nature of Employment and Obligations.

 

(a)        Nothing contained herein shall be deemed to create other than a terminable at will employment relationship between the Bank and Executive, and the Bank may

 

5

 

terminate Executive’s employment at any time, subject to providing any payments specified herein in accordance with the terms hereof.

 

(b)        Nothing contained herein shall create or require the Bank to create a trust of any kind to fund any benefits which may be payable hereunder, and to the extent that Executive acquires a right to receive benefits from the Bank hereunder, such right shall be no greater than the right of any unsecured general creditor of the Bank.

 

8.         Source of Payments.  It is intended by the parties hereto that all payments provided in this Agreement shall be paid in cash or check from the general funds of the Bank.

 

9.         No Attachment.

 

(a)        Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, reach and apply action, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.

 

(b)        This Agreement shall be binding upon, and inure to the benefit of, Executive, the Bank, and their respective successors and assigns.

 

10.       Assignability.  The Bank may assign this Agreement and its rights and obligations hereunder in whole, but not in part, to any corporation, bank or other entity with or into which the Bank may hereafter merge or consolidate or to which the Bank may transfer all or substantially all of its assets, if in any such case said corporation, bank or other entity shall expressly in writing assume all obligations of the Bank hereunder as fully as if it had been originally made a party hereto, but may not otherwise assign this Agreement or their rights and obligations hereunder.  The Executive may not assign or transfer this Agreement or any rights or obligations hereunder.

 

11.       Notice.  For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below:

 

	
To the Bank:
    	
Georgetown Savings Bank

2 East Main Street

Georgetown,   Massachusetts 01833
    
	
 
    	
 
    
	
To Executive:
    	
Philip J. Bryan

66 Lindall Street

Danvers, MA  01923
    

 

12.       Amendment; Waiver.  No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Executive and such officer or officers as may be specifically designated by the Board

 

6

 

of Directors of the Bank to sign on behalf of the Board of Directors.  No waiver by any party hereto at any time of any breach by any other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

13.       Governing Law.  The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the Commonwealth of Massachusetts.

 

14.       Headings.  The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

15.       Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect.

 

16.       Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

 

17.       Miscellaneous Provisions.

 

(a)        This Agreement does not create any obligation on the part of the Bank to make payments to (or to employ) Executive unless a Change in Control of the Bank or the Company shall have occurred.  Following a Change in Control, Executive’s employment may be terminated at any time, but any termination, other than termination for Cause, shall not prejudice Executive’s right to compensation or other benefits under this Agreement.  The Executive shall not have the right to receive compensation or other benefits for any period after termination for Cause as defined in Section 1(b) hereof.

 

(b)        The Bank’s Board may terminate Executive’s employment at any time, but any termination by the Bank’s Board other than termination for Cause as defined in Section 1(b) hereof shall not prejudice Executive’s right to compensation or other benefits under this Agreement.  Executive shall have no right to receive compensation or other benefits for any period after termination for Cause.

 

(c)        If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice served under Section 8(e)(3) (12 U.S.C. §1818(e)(3)) or 8(g)(1) (12 U.S.C. §1818(g)(1)) of the Federal Deposit Insurance Act (“FDIA”), the Bank’s obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings.  If the charges in the notice are dismissed, the Bank may in its discretion (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended and (ii) reinstate (in whole or in part) any of its obligations which were suspended.

 

(d)        If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank’s affairs by an order issued under Section 8(e)(4) (12 U.S.C. §1818(e)(4)) or 8(g)(1) (12 U.S.C. §1818(g)(1)) of the FDIA, all obligations of the Bank under

 

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this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.

 

(e)        If the Bank is in default as defined in Section 3(x)(1) (12 U.S.C. §1813(x)(1)) of the FDIA, all obligations of the Bank under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.

 

(f)         All obligations under this contract shall be terminated, except to the extent determined that continuation of the Agreement is necessary for the continued operation of the Bank, (i) by the Office of the Comptroller of the Currency, at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Bank under the authority contained in Section 13(c) (12 U.S.C. §1823(c)) of the FDIA; or (ii) by Executive or his designee at the time Executive or his designee approves a supervisory merger to resolve problems related to operation of the Bank or when the Bank is determined by Executive to be in an unsafe or unsound condition.  Any rights of the parties that have already vested, however, shall not be affected by such action.

 

(g)        Notwithstanding any other provision of this Agreement to the contrary, any payments made to Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the FDIA (12 U.S.C. § 1828(k)) and the regulations promulgated thereunder, including 12 C.F.R. Part 359.

 

18.       Reinstatement of Benefits Under Section 17(g).  In the event Executive is suspended and/or temporarily prohibited from participating in the conduct of the Bank’s affairs by a notice described in Section 17(c) hereof (the “Notice”) during the term of this Agreement and a Change in Control, as defined herein, occurs, the Bank will assume its obligation to pay and Executive will be entitled to receive all of the termination benefits provided for under Section 3 of this Agreement upon the Bank’s receipt of a dismissal of charges in the Notice by the appropriate federal banking regulator or the notice is terminated by the appropriate federal banking regulator.

 

19.       Arbitration.  Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a single arbitrator selected by the Bank sitting in a location within fifty (50) miles from the location of the Bank’s main office, in accordance with the rules of the American Arbitration Association then in effect.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction; provided, however, that Executive shall be entitled to seek specific performance of his right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement, other than in the case of a termination for Cause.

 

20.       Payment of Costs and Legal Fees.  All reasonable costs and legal fees paid or incurred by Executive pursuant to any dispute or question of interpretation relating to this Agreement shall be paid or reimbursed by the Bank, provided, however, that such reimbursement shall occur no later than two and one-half (2 1⁄2) months after the end of the year in which Executive is successful on the merits pursuant to a legal judgment, arbitration or settlement.

 

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21.       Confidentiality.  Executive recognizes and acknowledges that the knowledge of the business activities and plans for business activities of the Bank and affiliates thereof, as it may exist from time to time, is a valuable, special and unique asset of the business of the Bank.  Executive will not, during or after the term of his employment, disclose any knowledge of the past, present, planned or considered business activities of the Bank or affiliates thereof to any person, firm, corporation, or other entity for any reason or purpose whatsoever (except for such disclosure as may be required to be provided to the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, or other bank regulatory agency with jurisdiction over the Bank or Executive).  Notwithstanding the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Bank or its affiliates, and Executive may disclose any information regarding the Bank or its affiliates which is otherwise publicly available or which Executive is otherwise legally compelled to disclose.  In the event of a breach by Executive of the provisions of this Section, the Bank or its affiliates will be entitled to an injunction restraining Executive from disclosing, in whole or in part, the knowledge of the past, present, planned or considered business activities of the Bank or affiliates thereof, or from rendering any services to any person, firm, corporation, other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed.  Nothing herein will be construed as prohibiting the Bank or its affiliates from pursuing any other remedies available to the Bank or its affiliates for such breach or threatened breach, including the recovery of damages from Executive.

 

22.       Entire Agreement.  This Agreement embodies the entire agreement between the Bank and Executive with respect to the matters agreed to herein.  All prior agreements between the Bank and Executive with respect to the matters agreed to herein are hereby superseded and shall have no force or effect, except that this Agreement shall not affect or operate to reduce any benefit or compensation inuring to Executive of a kind elsewhere provided.  No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to the Executive without reference to this Agreement.

 

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IN WITNESS WHEREOF, this Agreement is made effective as of the date first above written.

 

 

	
 
    	
 
    	
GEORGETOWN   SAVINGS BANK
    
	
Attest:
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
/s/ Wendy Girroir
    	
 
    	
By:
    	
  /s/ Robert E. Balletto
    
	
 
    	
 
    	
 
    	
Robert E. Balletto,   President and Chief
    
	
 
    	
 
    	
 
    	
Executive Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Attest:
    	
 
    	
EXECUTIVE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
  /s/ Philip J. Bryan
    
	
/s/ Wendy Girroir
    	
 
    	
 
    	
Philip J. Bryan, Senior   Vice President and
    
	
 
    	
 
    	
 
    	
Chief Lending Officer
    

 

10

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