Share Purchase Agreement
Exhibit
10.2
BETWEEN:
Jinzhou
Wonder Auto Suspension System Co., Ltd. , a corporation duly formed under the
laws of the People’s Republic of China with its legal address at Bohai Street,
Jinzhou Economy and Technology Development Zone, Liaoning Province, China
(“PRC”), herein represented by Xx. Xxxxx Xxx, its authorized representative and
president (hereinafter referred to as the “Seller”);
AND:
Jinzhou
Halla Electrical Equipment Co., Ltd., a corporation duly formed under the laws
of the People’s Republic of China with its legal address at Xx. 00, Xxxx Xxxxxx,
Xxxxxxx Xxxx, Xxxxxxxx Xxxxxxxx, Xxxxx (“PRC”),
herein represented by Xx. Xxxxxxx Xxxx, its authorized representative and board
chairman (hereinafter referred herein to as the “Purchaser,”
and
together with the Seller, the “Parties”);
WHEREAS,
the Seller is the 38.776% shareholder of Jinzhou Wanyou Mechanical Parts Co.,
Ltd. (“Wanyou”)
which
is in the business of manufacturing, marketing and distributing shafts of
alternators and starter, shafts of auto shock absorbers and related products
within the PRC;
WHEREAS,
the Purchaser is the 20.408% shareholder of Wanyou, a Sino-Foreign joint venture
established under the PRC laws.
WHEREAS,
the Seller, the Purchaser and Hong Kong Friend Branches Limited have executed
the Articles of Association and other agreements necessary to give effect to
Wanyou’s business objectives and business scope and other ancillary documents
contemplated thereunder. All such documents are hereinafter collectively
referred to as the “Wanyou
Documents”;
WHEREAS,
Wanyou has received all approvals necessary for its establishment and operation
from the relevant governmental authorities of the PRC, including its business
license;
WHEREAS,
pursuant to Section 14 of Wanyou’s Articles of Association, the board of
directors (the “Board”)
of
Wanyou is the highest authority of Wanyou and has the authority and
responsibility to determines all important issues regarding Wanyou;
WHEREAS,
on April 2, 2007, the Board has unanimously adopted board resolutions which
authorizes and approves the amendment of the Wanyou Documents and the sale
by
the Seller and the purchase by the Purchaser of 38.776% of the shares of Wanyou
held by the Seller and any other interest held by the Seller in Wanyou
(collectively, the “Seller
Interest”),
and
the Board has authorized Wanyou to take all actions and to execute all documents
as may be necessary and proper to give effect to such resolutions;
NOW,
THEREFORE, the Parties, pursuant to the principle of equality and mutual benefit
and through friendly consultations at Jinzhou city, Liaoning Province of PRC,
hereby enter into this Agreement on the 2nd
date of
April, 2007 and reach the agreements as follows (the “Execution
Date”):
1
Article
1 Transfer of the Seller Interest to the Purchaser
| 1.1 |
In
accordance with this Agreement, the Seller hereby agrees to sell to
the
Purchaser and the Purchaser hereby agrees to purchase from the Seller
the
Seller Interest (the “Share
Transfer”).
|
| 1.2 |
For
the purpose of clarification and without limiting the generality of
the
foregoing, the Purchaser hereby agrees to resume all of the obligations
relating to the Seller Interest under the Joint Venture
Documents.
|
Article
2 Purchase Price and Other Payments
2.1
The
Seller hereby agrees to sell to the Purchaser, and the Purchaser agrees to
purchase from the Seller the Seller Interest, for a total cash consideration
of
Eight Million U.S. Dollars (US$8,000,000) (the “Purchase
Price”).
2.2
The
Purchase Price shall be paid in three installments. Within three (3) months
after the Execution Date, the Purchaser shall pay the first payment in the
amount of US$3,000,000 in cash to the Seller’s designated bank
account.
The
second payment in the amount of US$3,000,000 shall be paid to the Seller’s
designated bank account upon Wanyou’s fulfillment of a net profit of
RMB23,000,000 within twelve (12) months after the signing of the Agreement
(from
April 2, 2007 to April 1, 2008). In case that such targeted net profit is not
fulfilled, the Seller hereby agrees that the second installment of the payment
shall be reduced proportionally.
The
third
payment of US$2,000,000 shall be paid to the Seller’s designated bank account
upon Wanyou’s fulfillment of a net profit of RMB29,000,000 for the twelve (12)
months from April 2, 2008 to April 1, 2009. In case that such targeted net
profit is not fulfilled, the Seller hereby agrees that the third installment
of
the payment shall be reduced proportionally.
2.3
The
Seller hereby agrees that upon the signing of this agreement, the Purchaser
shall immediately be deemed as the legal owner of the Seller Interest (the
Purchaser becomes 59.184% shareholder of Wanyou, together the 20.408% interest
of Wanyou already owned by the Purchaser) and involved immediately in the
running of Wanyou’s business.
2.4
Within fifteen (15) business days after the Seller received the first payment
from the Purchaser:
(a)
the
Purchaser and the Seller shall prepare, execute and file with the relevant
governmental authorities of the PRC all documents necessary or required for
the
governmental approval and registration of the Share Transfer hereunder;
and
2
(b)
the
Seller shall provide the Purchaser with all necessary documents and assistances
in order to realize the Purchaser’s immediate involvement in Wanyou’s business
operation upon the signing of this Agreement.
2.5
the
Seller shall not retain any of the Seller Interest including its original power
and interest in Wanyou upon the signing of this Agreement.
Article
3 Disposition of the Distributable Profit Accrued Before the Effective Date
of
this Agreement
After
the
Execution
Date, the total distributable profit of Wanyou in fiscal year 2006 (the
“Profit”)
shall
be disposed of as follows:
3.1
The
Profit shall be distributed to all persons that are Wanyou shareholders
immediately after the signing of this Agreement.
Article
4 Wanyou’s
Liabilities
4.1
After
the Effective Date,
the
Seller shall no longer be responsible for any liabilities arising from, related
to or in connection with Wanyou whether arising before, on or after the
consummation of the transactions contemplated by this Agreement. In case this
Agreement is not effected, the Seller shall bear the relevant liabilities of
Wanyou.
4.2
The
Sellers and the Buyers shall be liable for their own tax liabilities arising
from, related to or in connection with the Share Transfer contemplated by this
Agreement within PRC or pursuant to the laws or regulations of the
PRC.
Article
5 Board of Wanyou
5.1
Upon
the
signing of this Agreement, the directors designated by the Seller shall resign
from the Board immediately and such resignation shall become effective
automatically. The directors designated by the Purchaser shall be appointed
and
such appointment shall become effective immediately.
Article
6 Confirmation of fairness of the transaction
6.1
The
Parties hereby confirm that the Purchase Price
is
arm’s-length price and represents fair market value of the Seller
Interest.
Article
7 Parties’ Responsibilities
7.1
From
the Execution Date, the Parties shall take appropriate commercial measures
to
minimize any adverse consequences of the Share Transfer on the employees and
the
customers of Wanyou.
The Parties shall properly exercise their rights as shareholders of Wanyou
in
light of their pre-existing ownership, and each Party represents and warrants
that its designated directors shall comply with the terms of this
Agreement.
3
7.2
The
Seller covenants that it will carry out no competitive businesses with Wanyou
from the Execution Date.
7.3
The
Purchaser hereby covenants and agrees the following:
7.3.1
It
shall be fully responsible for, observe and perform all of the obligations
relating to, in connection with the Seller Interest under the Wanyou Documents
and it will take all actions that are necessary or required to give full force
and effect to this Agreement.
7.3.2
It
will carry on and conduct Wanyou’s business in a proper and efficient manner so
as to preserve and protect its properties, assets, business operations, incomes,
rents and profit, and keep the major senior management, other than directors
of
Wanyou, remain unchanged during years 2007 and 2008.
Article
8 Amendment
8.1
This
Agreement can be amended only by written agreement between the
Parties.
Article
9 Termination
9.1
This
Agreement may
be
terminated by written agreement between the Parties.
9.2
If
one Party commits a breach or delays performance of any of its obligation under
this Agreement and fails to remedy such breach or performance delay within
thirty (30) business days upon receiving a written notice of such breach or
delay from the non-breaching or non-delaying Party, the non-breaching or
non-delaying Party may terminate this Agreement.
9.3
If
one Party causes this Agreement impossible to perform, the other Party may
terminate this Agreement.
Article
10 Remedies
10.1
If
one Party commits a beach or does not perform its duties or obligations under
this Agreement for any reasons,
such
breaching or non-performing Party shall be responsible for the breach or
non-performance of its duties or obligations and shall compensate all losses
suffered by the non-breaching Party as a result thereof.
10.2
In
the event the Purchaser fails to perform its obligations set forth in Section
2.2 of this Agreement and such non-performance lasts up to fifteen (15) calendar
days, the Seller may unilaterally terminate the Agreement. If this Agreement
is
so terminated by the Seller, the Purchaser shall pay to the Seller a liquidated
damage in an amount equal to ten percent (10%) of the Purchase
Price.
4
Article
11 Force Majeure
11.1
If
performance of this Agreement in whole or in part is prevented, restricted
or
interfered with by reason of an earthquake, storm, flood, fire, war, strike
or
any other cause beyond the reasonable control of the Parties (each a
“Force
Majeure condition”),
then
the affected Party shall provide the other Party with a valid evidentiary
document setting forth in detail the Force Majeure Condition within fifteen
(15)
days, its expected duration and the consequences thereof. The Parties shall
thereafter consult with each other so as to avoid or minimize any adverse effect
of any Force Majeure Condition on this Agreement or the transactions
contemplated hereunder. However, if a Force Majeure condition lasts for more
than three (3) months, the Parties shall try their best to avoid or reduce
damages cause by negotiation. If the Parties cannot agree on a mutually
satisfying solution within three (3) months of such negotiation, either Party
may terminate this Agreement by giving the other Party a thirty (30) days
written notice of such termination.
Article
12 Dispute Resolution
12.1
All
disputes between the Parties arising out of or in connection with this Agreement
shall be settled between the Parties through
friendly negotiation. If an agreement cannot be reached between the Parties
within thirty (30) days upon the receipt of the written notice by the disputing
Party, either Party may submit the dispute to arbitration to the International
Chamber of Commerce in Stockholm, Sweden for final resolution in accordance
with
its arbitration rules. The judgment of the arbitration panel shall be final
and
binding upon the Parties and both Parties hereby agree to abide by such judgment
of the arbitration panel. The arbitration fees shall be borne by the losing
Party.
Article
13 Waiver
13.1
Any
act of non-performance or delay on the performance of any rights, damages for
breach, termination and any other rights under this Agreement shall not be
deemed an act of waiver. The exclusive or partial performance of any rights,
damages for breach, termination and any other rights under this Agreement shall
not affect the performance of these and other rights.
5
Article
14 Disclosure
14.1
The
terms of this Agreement and any information disclosed to the non-disclosing
Party by the disclosing Party in the course of executing this Agreement shall
be
deemed confidential, and each Party will refrain from disclosing the other
Party’s confidential information to any third party without the approval of the
non-disclosing Party unless required by any governmental authority or
administrative agency.
Article
15 Miscellaneous
15.1
This
Agreement is written and executed in Chinese and English, and the two versions
written in Chinese and in English with equal legal effect. In the event of
any
conflicts between the two versions of this Agreement and can not be settled
by
mutual discussion, either Party may submit the dispute to arbitration to the
International Chamber of Commerce in Stockholm, Sweden for final resolution
in
accordance with its arbitration rules. The judgment of the arbitration panel
shall be final and binding upon the Parties and both Parties agree to abide
by
such judgment of the arbitration panel. The arbitration fees shall be borne
by
the losing Party.
15.2
This
Agreement contains the entire agreement between the Parties with respect to
the
transactions contemplated herein and supersedes all prior negotiations,
agreements and understandings.
15.3
In
case any one or more of the provisions of this Agreement is held invalid,
illegal or unenforceable in whole or in part, the validity, legality and
enforceability of the remaining provisions or the remaining applications shall
not be affected or impaired.
15.4
The
preamble forms an integral part of the present Agreement.
15.5Any
notices, requests, and communications required or provided for under this
Agreement shall be in writing and shall be delivered via mail, facsimile or
express mail.
15.6
This
Agreement shall be executed in seven (7) copies. The Seller and the Purchaser
shall each keep two (2) copies, and Wanyou shall keep one (1) copy. The
Purchaser shall keep the remaining two (2) copies for purposes of the Share
Transfer and any required governmental filings therefore.
Seller:
Jinzhou
Wonder Auto Suspension System Co., Ltd
Representative’s
Signature: /s/
Xxxxxx Xxx
Purchaser:
Jinzhou
Halla Electrical Equipment Co., Ltd
Representative’s
Signature: /s/
Xxxxxxx Xxxx
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