Agreement Regarding to
Exhibit
10.1
(Unofficial
Summary Translation)
Agreement
Regarding
to
Equity
Acquisition of Xi’an Simo Motor Incorporation (Group)
Among
Harbin
Tech Full Electric Co. Ltd.
And
Xi’an
Simo Electric Co. Ltd.
Shaanxi
Electric Machinery Association
Dated:
October 2, 2009
AGREEMENT
This
equity acquisition agreement (this “Agreement”) is made and entered into as of
October 2, 2009 at Xi’an City, People’s Republic of China by and among Harbin
Tech Full Electric Co. Ltd.,(“Party A”), and Xi’an Simo Electric Co. Ltd. and
Shaanxi Electric Machinery Association (each as “Party B1” and “Party B2”, and
collectively as “Party
Bs”).
RECITALS
WHEREAS,
Party A and Party Bs are both legal person duly incorporated and validly
existing according to PRC laws;
WHEREAS,
Party B1 and Party B2 are legitimate shareholders of Xi’an Simo Motor
Incorporation (Group) (“Simo Motor”), of which Party B1 owns 99.94% shares and
Party B2 owns 0.06% shares;
WHEREAS,
Simo Motor is a stock limited liability company, with registered address at
No.159 Ming Guang Road, Economy and Technology Development Zone, Xi’an,
China, of which the legal representative is Yang Yuncheng and the registered
capital as well as the contributed capital is RMB 165 million. The business
scope of Simo Motor covers: developing, manufacturing, selling and repairing
electric motor and other electric machinery, and equipment; processing and
manufacturing mold, hardware instruments and home appliances; selling packaging
equipment, automobile components, metallic materials, construction and building
materials, decoration materials and water-heating equipment;
WHEREAS,
Party B1 and Party B2 desire to sell to Party A, and Party A desires to purchase
from Party B1 and Party B2, the 100% of the outstanding shares of Simo Motor
held by Party B1 and Party B2 and all the corresponding assets of Simo Motor
upon the terms and subject to conditions of this Agreement.
NOW,
THEREFORE, regarding to transfer of all the shares and all of the corresponding
assets of Simo Motor, after equal negotiation, Party A and Party Bs agree on the
following:
Article
1 DEFINITIONS
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1.1.
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As
used in this Agreement, the following terms shall have the meanings
defined below:
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“Acquisition Equity” shall
mean the 100% shares of Simo Motor held by Party B1 and Party B2.
“Assets Corresponding to Acquisition
Equity” shall mean all of the assets and rights (including all the
credits, debts or obligations) of Simo Motor corresponding to the 100% shares of
Simo Motor, including but not limited to all of the manufacturing equipments,
real-estates, land use right, stocks, raw material, automobiles, intellectual
property, receivables, other receivables, payables, business contracts and
external investments owned by Simo Motor and so on, unless otherwise provided by
this Agreement.
“Acquisition Consideration”
shall mean all the consideration to be paid by Party A for this
acquisition.
“Closing Date” shall mean the
consummation day of this acquisition on which Party A and Party Bs complete all
the legal procedures of the transfer of Acquisition Equity (including but not
limited to the registration of share transfer of Simo Motor with the competent
Industrial and Commercial Bureau) under Article 2.3 hereof.
“Force Majeure” shall mean all
events which are unforeseen, unavoidable and insurmountable for its occurrence
and consequence, which arise after the effectiveness of this Agreement, which
are reasonably outside the control of any Party, which prevent total or partial
performance of the Agreement by any Party and which can not be cured by measures
which might reasonably be taken in the ordinary course of business by any Party.
Such events shall include but not limited to earthquakes, typhoons, fire, flood,
war, epidemics, civil disturbances, tsunami, lightning, and any other similar
events.
“PRC Laws and Regulations”
shall mean PRC laws, regulations and rules which are officially promulgated,
published, publicly available and already implemented.
“PRC” shall mean the People’s
Republic of China, which for the purposes of this Agreement shall not include
the territories of (a) the Hong Kong Special Administrative Region, China, (b)
the Macau Special Administrative Region, China, or (c) Taiwan,
China.
“RMB” means the lawful
currency of the People’s Republic of China.
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1.2.
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Titles
and headings to sections herein are inserted for convenience of reference
only, and are not intended to be a part of or to affect the meaning or
interpretation of this Agreement.
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Article
2 PURCHASE
AND SALE OF Acquisition Equity and Assets Corresponding to Acquisition
Equity
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2.1
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On
the Closing Date, upon the terms and subject to the conditions set forth
herein, Party Bs shall sell and deliver to Party A, and Party A shall
purchase and acquire from Party Bs, all of the Acquisition Equity and
Assets Corresponding to Acquisition Equity. Party B1 and Party B2
respectively give up the preemptive right on shares of Simo Motor for each
other.
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2.2
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Acquisition
Consideration and Payment
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2.2.1
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The
total Acquisition Consideration shall be no more than eight (8) times of
the audited total net profit that Simo Motor generated in 2008. Party A
will conduct verification on the assets and capital of Simo Motor within 6
months from the Closing Date. In the event the net assets of Simo Motor
confirmed based on such verification on the same day is less than that
confirmed by audit report, the difference shall be deducted from the total
Acquisition Consideration. All the debts payable and owed
by Simo Motor to Party B1 confirmed in audit report of Simo Motor are
already included in such Acquisition
consideration.
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2.2.2
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Party
A shall make the payment amounted to equivalent to six (6) times of the
audited total net profit that Simo Motor generated in 2008 as the first
installment of Acquisition Consideration to the bank account mutually
appointed by parties hereof within [10] working days after the
effectiveness of this Agreement, and the remaining amount of Acquisition
Consideration shall be confirmed upon verification on assets and capital
and be paid to Party Bs by Party A within seven months from the Closing
Date. Party Bs jointly acknowledge that the payment of Acquisition
Consideration to the appointed bank account made by Party A or its
assigned affiliate according to this Agreement shall be deemed as payment
of Acquisition Consideration to Party Bs by Party
A.
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2.3
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The
delivery of the Acquisition Equity and the transfer of the corresponding
rights and obligations contemplated by this Agreement shall take place on
the Closing Date, on which (1) Party B1 and Party B2 shall deliver to
Party A all the documents and instruments reasonably requested by Party A
and with respect to all the Acquisition Equity required to be delivered by
Party B1 and Party B2 pursuant to this Agreement; and (2) the registration
of the entire share transfer of Simo Motor held by Party B1 and Party B2
to Party A with the competent Industrial and Commercial
Bureau.
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2.4
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The parties hereof agree that:
unless there is
a delay resulting from reasons uncontrollable by
Party Bs, Party Bs shall complete the registration of the entire share transfer of Simo Motor with
the competent Industrial and Commercial Bureau within 15 working days
immediately after the payment of the first installment
of Acquisition Consideration
made by Party A, otherwise Party Bs shall pay Party A 0.01% of Acquisition Consideration as
penalty for each one day delayed, and in the event of delay more than [90]
days, Party A shall be entitled to terminate this Agreement unilaterally and Party Bs shall refund the
Acquisition
Consideration paid by
Party A within 5 working days after termination of this Agreement raised
by Party A.
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2.5
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Upon
consummation of this acquisition, if any costs listed below are
discovered, these costs shall be assumed by Party B1 and unrelated to
Party A or Simo Motor: (1) any costs incurred as a result of the prior
reformation of Xi’an Motor Plant and the formation of Xi’an Simo Motor
Co., Ltd. (the former Simo Motor); (2) any costs associated with the sort
out of shares held by employees of Xi’an Simo Motor Co., Ltd. or Simo
Motor ; (3) the payment of employment insurance and overtime pay of Simo
Motor, including those expenses resulted from reformation of state-owned
enterprises, which owed for periods prior to this acquisition; and (4) any
other debts, expenses, liabilities or economic obligations arising from
the reformation of Xi’an Motor Plant which should have been undertaken by
Simo Motor (The costs exclude those credits and liabilities
arising from normal operation of Simo Motor prior to the reformation and
accounted in the balance sheet of Simo Motor). The parties acknowledge
that the foregoing factors and all the liabilities assumed by Party B1 as
a result therefrom have been already fully considered and reflected in the
Acquisition Consideration.
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2.6
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During
the course of and/or upon the consummation of acquisition contemplated by
this Agreement, Party Bs and the shareholders of Party Bs shall be liable
for the debts of Simo Motor or its subsidiaries inconsistent with the
representations and warranties made by Party Bs hereof, any claims or
obligation of Simo Motor and its subsidiaries to a third party, arising
from contractual liabilities, tort or any other reasons and existing prior
to the Closing Date and not expressly disclosed to Party A by Party
Bs.
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2.7
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Upon
the consummation of this acquisition, the employment contract entered into
by Simo Motor and its employees which are undue will remain valid, and the
amendment, cancellation, termination and renewal of employment contract
will be made by Simo Motor in accordance with related provisions of
<Labor Law>, <Employment Contract
Law>.
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2.8
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Party
A and Party Bs shall bear respectively all and any taxes imposed in
relation to the transactions contemplated under this Agreement in
accordance with the PRC Laws and
Regulations.
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Article
3 REPRESENTATIONS
AND WARRANTIE
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3.1
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Party
B1 and Party B2 jointly and severally, hereby represent and warrant
to Party A, as of the Closing Date as
follows:
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3.1.1
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As
of the Closing Date, (i) 100% shares of Simo Motor, and (ii) all of the
shares of subsidiaries of Simo Motor held by Simo Motor are each free and
clear of any mortgages, liens, claims, charges, pledges or other
encumbrances of any nature
whatsoever.
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3.1.2
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Up
to and as of the transfer of shares of Simo Motor to Party A by Party B1
and Party B2, Simo Motor and its subsidiaries shall duly own assets or
rights and interests disclosed to Party
A.
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3.1.3
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Party
Bs shall be responsible to Party A for the debts, contingent debts and any
claims or liabilities relating to Simo Motor, which is not disclosed in
the formal acquisition agreement.
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3.1.4
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As
of the execution of this Agreement, Party Bs have obtained all the
permits, approvals and filings (if applicable) as required by PRC Laws and
Regulations with respect to the sale of 100% shares of Simo Motor and the
transfer of Assets Corresponding to Acquisition
Equity.
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3.1.5
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Simo
Motor (i) has been duly organized, is validly existing and is in good
standing as a stock limited liability company, and has been duly approved
or registered by competent PRC competent authorities, (ii) has all power
and authority required to carry on its business and to own, lease and
operate its properties and assets, (iii) has obtained and remained valid
in full force permits and approvals by competent governmental authorities,
which are presently required or necessary to carry on its business and to
operate its properties. Simo Motor has not received any notice
from any governmental authority that calls into question the full force
and validity of any existing permit or
approval.
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3.1.6
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The
shares of Simo Motor held by Party B1 and Party B2 constitute all of the
issued and outstanding shares of Simo Motor, are validly issued in
accordance with PRC Laws and Regulations and fully paid, and were not
issued in violation of any preemptive or other similar
right. No other person or entity has any right or option of any
nature to acquire any additional shares of Simo
Motor.
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3.1.7
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All
of the shares of Simo Motor held by Party B1 and Party B2 are not subject
to any rescission right or put right nor does any entity or person have
the right to require Simo Motor to repurchase such
shares.
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3.1.8
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Party
B1 and Party B2 have valid and full title to all of the shares of Simo
Motor.
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3.1.9
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Unless
disclosed to Party A, Simo Motor has no other wholly-owned or partly owned
subsidiaries, and does not own, directly or indirectly, any interest or
investment in any corporation, partnership, limited liability company,
joint venture or trust.
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3.1.10
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Simo
Motor and Party Bs are and have been in compliance with PRC Laws and
Regulations applicable to them or any of their respective properties,
assets or businesses.
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3.1.11
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All
the documents and materials in connection with Simo Motor as well as its
subsidiaries and Party Bs delivered and to be delivered to Party A by
Party Bs, including but not limited to meeting minutes, resolutions of
shareholders meeting and board meeting, financial statements, account
books and other documents in connection with Simo Motor as well as its
subsidiaries and Party Bs, accurately reflect in all material respects of
all corporate actions and other actions taken by Simo Motor
and its subsidiaries as well as fairly present in all material
respects the financial position and the results of operations of Simo
Motor and its subsidiaries as of the respective dates thereof and for the
respective periods then ended.
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3.1.12
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To
the knowledge of Party Bs, there are no action, proceeding, claim, suit,
demand, arbitration, opposition, challenge, hearing, notice of violation
or deficiency or investigation, domestic or foreign, pending or,
threatened, that relate, directly or indirectly, to this Agreement or that
apply to Simo Motor and its subsidiaries or Party Bs, their respective
assets, properties or business or to the Assets Corresponding to
Acquisition Equity.
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3.1.13
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To
the knowledge of Party Bs, there is no event that is reasonably likely to
occur in the foreseeable future, which if it were to occur, could have a
material adverse change to Simo Motor and its subsidiaries or Party Bs or
its respective assets, properties or business or to the Assets
Corresponding to Acquisition
Equity.
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3.1.14
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Except
with the prior written consent of Party A, during the period from the
execution date to the Closing Date of this Agreement, the businesses and
ordinary operation of Simo Motor and its subsidiaries shall be conducted
under the supervision of Party A; Party Bs agree to cause Simo Motor and
its subsidiaries to make all commercially reasonable efforts consistent
therewith to preserve the intactness of Simo Motor’s and its subsidiaries’
material properties, assets and business organizations. Unless otherwise
specified in this Agreement, without the prior written consent of Party A,
Party Bs shall cause Simo Motor and its subsidiaries not
to:
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(1)
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amend
any of its organizational documents such as articles of association or
internal rules and policies;
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(2)
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liquidate,
dissolve, recapitalize or otherwise wind up its
business;
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(3)
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make
any other changes in the capital structure of Simo Motor and its
subsidiaries;
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(4)
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other
than in the ordinary course of business and consistent with past practice,
sell, assign, dispose of, lease, pledge, or encumber, or authorize the
sell, assign, dispose of, lease, pledge, or encumber of, properties or
assets of Simo Motor and its
subsidiaries;
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(5)
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incur
any indebtedness or issue any debt securities or assume or guarantee the
obligations of any other entities;
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(6)
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cancel
any indebtedness owed to Simo Motor and its subsidiaries by any third
party;
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(7)
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enter
into or renew, amend or extend any contracts, agreements or binding
documents other than those of ordinary
operation;
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(8)
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agree
in writing to take any of the foregoing
actions.
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3.1.15
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Party
Bs shall provide prompt written notice to Party A of any change in any of
the information contained in the representations and warranties made by
Party Bs in Article 3 and shall promptly furnish any information which
Party A may reasonably request in relation to such
change.
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3.1.16
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Party
B1 and Party B2 agree to jointly and severally undertake and perform all
the obligations of Party Bs under this
agreement.
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3.2
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All
disclosures furnished and representations and warranties made herein by
Party Bs to Party A regarding to the transactions contemplated under this
Agreement are true and do not contain any untrue or misleading statement
of a material fact or omit to state any material
fact.
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3.3
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Party
A represents and warrants to Party Bs as of the Closing Date as
follows:
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3.3.1
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Party
A has been duly organized and validly exists as a limited liability
company under the PRC Laws and
Regulations.
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3.3.2
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Party
A will pay Party Bs the Acquisition Consideration pursuant to the
provisions of this Agreement.
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3.4
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Each
party hereby represents and warrant to the other parties as of the Closing
Date as follows:
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3.4.1
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It
has all requisite corporate power and authority to execute and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
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3.4.2
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This
Agreement constitutes a legal, valid and binding obligation of it,
enforceable against it in accordance with its
terms.
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3.4.3
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The
execution by it of this Agreement and the consummation by it of the
transactions contemplated do not and will not (i) violate, conflict with
or result in the breach of any PRC Law and Regulations applicable to it or
any of its properties or assets, or (ii) result in a breach of or the
termination of any contract or agreement which it or its property or
assets are bound.
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3.4.4
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Upon
the terms and subject to the conditions of this Agreement, each of the
Parties shall use its reasonable best efforts to take all actions to
consummate the transactions contemplated by this Agreement as promptly as
practicable, including but not limited to the prompt preparation and
filing of all forms, registrations and notices and use its reasonable best
efforts as necessary to obtain any requisite approvals, consents by any
governmental authority.
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3.4.5
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Each
party shall promptly inform the other parties of any communication from
any governmental authority regarding to the transactions contemplated by
this Agreement. If any party receives a request for additional information
or documentary material from any such governmental authority with respect
to the transactions contemplated by this Agreement, then such party shall
endeavor in good faith to make an appropriate response as soon as
reasonably practicable after consultation with the other
parties.
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Article
4 TERMINATION
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4.1
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This
Agreement may be terminated in the following
way:
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4.1.1
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by
mutual written consent of Party A and Party
Bs;
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4.1.2
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by
Party A unilateral if:
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(1)
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a
governmental authority shall have issued an order, decree or regulation or
taken any other action, in each case permanently restraining or otherwise
prohibiting the transactions contemplated by this Agreement;
or
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(2)
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in
accordance with provision under Article 2.4 of this Agreement;
or
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(3)
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there
is a default or breach by any of Party Bs with respect to the due and
timely performance of any of its obligations contained herein, or if the
representations or warranties of any of Party B’s contained in this
Agreement shall have become inaccurate and has not been cured within
twenty (20) calendar days after written notice by Party A to such
breaching party.
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4.2
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In
the event of the termination of this Agreement pursuant to Article 4
hereof, this Agreement shall forthwith become void and have no effect.
Nothing contained in this Article shall relieve any party from liability
for any breach of this Agreement.
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Article
5 NON-COMPETITON
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5.1
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After
consummating transfer of Acquisition Equity, Party Bs or its shareholders
shall not engage in any business which is in competition with the business
currently engaged by Simo Motor within three years from the completion of
this acquisition.
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Article
6 SURVIVAL
& INDEMNIFICATION
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6.1
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Subject
to the provisions of this Agreement, the representations and warranties of
Party Bs in Article 3 shall survive the Closing Date and remain in full
force and effect after the Closing
Date.
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6.2
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Party
Bs agree to indemnify, defend and hold harmless Party A and its successors
and assignees and Simo Motor from and against all losses and damages which
any such party may actually incur or suffer as a result of or in
connection with any breach of any representation or warranty made by Party
B1 or Party B2 under this Agreement or the failure to perform any covenant
or agreement set forth in this Agreement to be performed by Party B1 or
Party B2.
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Article
7 FORCE
MAJEURE
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7.1
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In
the event of occurrence of Force Majeure, the obligations of the parties
under this Agreement shall be suspended during the period of Force
Majeure, and the relevant performance period shall be automatically
extended by a time period which is equivalent to the actual duration of
the Force Majeure.
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7.2
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The
Party claiming Force Majeure shall notify the other parties in writing
without delay, and within fifteen (15) days thereafter provide information
concerning and documents validly evidencing the occurrence and the time of
occurrence of the Force Majeure. The party claiming Force Majeure shall
take all reasonable actions to minimize the effects of the Force Majeure
as soon as practicable.
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7.3
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In
the event of occurrence of Force Majeure, the parties shall consult with
each other without delay so as to work out an equitable resolution and
shall use their best endeavours to minimize the effects of the Force
Majeure.
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Article
8 Resolution
of Disputes
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8.1
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In
the event of any dispute, controversy or claim arising out of or relating
to this Agreement, including but not limited to any questions regarding
the breach, termination or invalidity hereof (“Dispute”), the Parties
shall attempt in the first instance to resolve such Dispute through
friendly consultations. Such consultations shall commence promptly after a
party has advised the other parties in writing of the existing
Dispute.
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8.2
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If
the Dispute has not been resolved within thirty (30) days from the date on
which one party advised the other Parties of the first time in writing of
the existence of a Dispute, any party may submit the Dispute to the China
International Economic and Trade Arbitration Commission （”CIETAC”） in
accordance with this Article for arbitration in Beijing in accordance with
the CIETAC’s rules of arbitration then
applicable.
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8.3
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The
arbitral award shall be final and binding upon the
Parties. Except for the specific matters in dispute which are
then currently being arbitrated, the Parties shall continue to perform
their obligations under this
Agreement.
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8.4
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The
costs of arbitration shall be borne by the losing party, unless otherwise
determined by the arbitration
award.
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Article
9 MISCELLANEOUS
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9.1
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Waiver
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No
failure or delay of any party to exercise a right under this Agreement
shall be deemed a waiver of such right. The single or partial exercise of
a right shall not prevent the exercise of the same right in the
future.
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9.2
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Notice
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All
notices and other communications required or permitted hereunder will be
in writing and, unless otherwise provided in this Agreement, will be
deemed to have been duly given when delivered in person or when dispatched
by electronic facsimile transfer (confirmed in writing by mail
simultaneously dispatched) or two (2) days after having been dispatched by
courier to the appropriate party at the address specified
below:
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If
to Party A, to No.9 Ha Ping Xi Lu, Ha Ping Lu Xx Xxxxx Qu Xxxxxx Xxx Fa
Qu, Harbin, China 150060
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Attention:
Xxxxxx Xxxx
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If
to Party B1, to N0.159, Ming Guang Road, Economy and Technology
Development Zone, Xi’an
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Attention:
Xxxxxxxx Xxxx
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If
to Party B2, to N0.159, Ming Guang Road, Economy and Technology
Development Zone, Xi’an
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Attention:
Xxxxxxxx Xxxx
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or
to such other address or addresses as any such party may from time to time
designate as to itself by like
notice.
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9.3
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Assignment
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No party
shall assign any of its rights or obligations hereunder to any third party
without the prior written consent of the other Parties.
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9.4
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Invalidity
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The
invalidity of a provision of this Agreement shall not affect the validity of any
other provision of this Agreement.
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9.5
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Language
and Execution in Counterparts
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This
Agreement is made in Chinese in quadruplicate originals with equal weight, and
each Party shall keep one original with one original for Simo
motor.
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9.6
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Amendments
|
This
Agreement may be changed, amended or modified only by means of written agreement
executed by the duly authorized representatives of the parties or their
permitted successors or assignees.
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9.7
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Applicable
Law
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The
conclusion, validity, interpretation, implementation of this Agreement and the
resolution of disputes hereunder, shall be governed by PRC Laws and
Regulations.
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9.8
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Effectiveness
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This
Agreement shall take effect when it is executed by the Parties.
IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by
their respective duly authorized representative on the date first set forth
above.
(No text
below)
(This is
the page for execution of Agreement Regarding to Equity Acquisition of Xi’an
Simo Motor Incorporation (Group) Among Harbin Tech Full Electric Co. Ltd. And
Xi’an Simo Electric Co. Ltd. Shaanxi Electric Machinery
Association)
Party
A: Harbin Tech Full Electric Co. Ltd.
Legal
Representative / Authorized Representative:
Party
B1: Xi’an Simo Electric Co. Ltd.
Legal
Representative / Authorized Representative:
Party
B2: Shaanxi Electric Machinery Association
Legal
Representative / Authorized Representative:
