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ANNEX A
EQUITY ACQUISITION AGREEMENT AMONG:
ASIA AUTOMOTIVE ACQUISITION CORPORATION
HUNAN TX ENTERPRISE CO., LTD. AND
THE INDIVIDUALS SET FORTH ON SCHEDULE A
Dated: July 24, 2007
RECITALS 4
Article 1 THE TX CHINA ACQUISITION 4
Section 1.01 Purchase and Sale. 4
Section 1.02 Purchase Price. 4
Section 1.03 Payment of Purchase Price 6
ARTICLE 2 THE CLOSING 6
Section 2.01 The Closing. 6
Section 2.02 Deliveries. 6
Section 2.03 Additional Documents. 6
Section 2.04 Further Assurances. 6
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF TX CHINA AND THE TX
CHINA SHAREHOLDERS 7
Section 3.01 The TX China Equity. 7
Section 3.02 Organization of TX China. 7
Section 3.03 TX China Subsidiaries. 7
A-1
Section 3.04 Reorganization. 8
Section 3.05 Authority and Corporate Action; No Conflict. 8
Section 3.06 No Undisclosed Majo Liabilities. 8
Section 3.07 Real Property. 8
Section 3.08 Intellectual Property. 9
Section 3.09 Title and Condition to Assets. 9
Section 3.10 Compliance with Law. 9
Section 3.11 Disclosure. 9
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF AAAC 9
Section 4.01 Organization. 9
Section 4.02 Authority and Corporate Action; No Conflict. 10
Section 4.03 SEC Reports. 10
Section 4.04 Compliance with Law. 10
Section 4.05 Disclosure. 10
ARTCLE 5 COVENANTS OF TX CHINA AND THE TX CHINA SHAREHOLDERS 11
Section 5.01 Conduct of the Business. 11
Section 5.02 Fulfillment of Conditions. 11
Section 5.03 Disclosure of Certain Matters. 12
Section 5.04 Regulatory and Other Authorizations; Notices and Consents. 12
Section 5.05 Employment Agreements. 12
ARTICLE 6 COVENANTS OF AAAC 13
Section 6.01 Conduct of the Business. 13
Section 6.02 14A Proxy Statement Filing 13
Section 6.03 AAAC Special Shareholders' Meeting. 13
Section 6.04 Fulfillment of Conditions. 14
Section 6.05 Disclosure of Certain Matters. 14
Section 6.06 Regulatory and Other Authorizations; Notices and Consents. 14
Section 6.07 Key Employees Employment Agreement 15
Section 6.08 Future Incentive Plan. 15
Section 6.09 Survival of Representations and Warranties. 15
ARTICLE 7 ADDITIONAL AGREEMENTS AND COVENANTS OF THE PARTIES 15
Section 7.01 Change of Name. 15
Section 7.02 Other Information. 15
Section 7.03 Mail Received After Closing. 15
Section 7.04 Further Action. 16
Section 7.05 Schedules. 16
Section 7.06 Execution of Agreements. 16
Section 7.07 Confidentiality. 16
Section 7.08 Public Announcements. 17
Section 7.09 Board of Directors and Executive Officers of TX China. 17
Section 7.10 Board of Directors of TX International. 17
Section 7.11 Corporate Governance Practice. 18
Section 7.12 Future Transaction 20
ARTICLE 8 CONDITIONS TO CLOSING 21
Section 8.01 Conditions to Each Party's Obligations. 21
Section 8.02 Conditions to Obligations of TX China and the TX China
Shareholders. 21
Section 8.03 Conditions to Obligations of AAAC. 22
ARTICLE 9 TERMINATION AND ABANDONMENT 22
Section 9.01 Methods of Termination. 22
Section 9.02 Effect of Termination. 23
ARTICLE 10 DEFINITIONS 23
Section 10.01 Certain Defined Terms. 23
ARTICLE 11 GENERAL PROVISIONS 26
Section 11.01 Expenses. 26
Section 11.02 Notices. 26
Section 11.03 Amendment. 27
Section 11.04 Waiver. 27
Section 11.05 Headings. 28
Section 11.06 Severability. 28
Section 11.07 Entire Agreement. 28
Section 11.08 Successors. 28
Section 11.09 Arbitration. 28
Section 11.10 Governing Law. 29
Section 11.11 Language. 29
Section 11.12 Counterparts. 29
SCHEDULE A TX CHINA SHAREHOLDERS 28
SCHEDULE B TX CHINA SUBSIDIARIES 28
SCHEDULE C CERTIFICATE OF INCORPORATION OF TX INTERNATIONAL 28
SCHEDULE D DISCLOSURE SCHEDULE 28
SCHEDULE E MEMORANDUM OF REORGANIZATION 29
SCHEDULE F FORM OF MANAGEMENT EMPLOYMENT AGREEMENT 30
SCHEDULE G LABOR CONTRACT 30
SCHEDULE H CORPORATE GOVERNANCE RULES 30
EQUITY ACQUISITION AGREEMENT
THIS EQUITY ACQUISTION AGREEMENT (the "Agreement"), dated July 25, 2007, is
among ASIA AUTOMOTIVE ACQUISITION CORPORATION (a corporation registered in the
United States of America,hereinafter referred to as "AAAC"), and HUNAN TX
ENTERPRISE CO., LTD., (a limited liability company registered in the PRC,
hereinafter referred to as "TX China") and the individuals listed on Schedule A
hereto (collectively, the "TX China Shareholders"); and each of AAAC, TX China
and the TX China Shareholders are referred to herein individually as a "Party"
and collectively as the "Parties."
Capitalized terms used herein that are not otherwise defined shall have the
meanings ascribed to them in ARTICLE 10 hereof.
RECITALS
WHEREAS, TX China, together with the companies to be wholly owned subsidiaries
of TX China as listed on Schedule B
hereto (the "TX China Subsidiaries"), own and operate their auto parts
manufacturing business in the PRC; and
WHEREAS, the TX China Shareholders are the direct and beneficial owners of all
of the stock equity of TX China (the "TX China Equity"); and
WHEREAS, subject to the terms and conditions of this Agreement, AAAC, at the
Closing, shall acquire all of the TX China Equity from the TX China Shareholders
(the "TX China Acquisition"), representing 100% equity interest in TX China.
After the TX China Acquisition, AAAC will change its name into Tongxin
International Ltd. ("TX International").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the Parties agree as follows:
ARTICLE 1
THE TX CHINA ACQUISITION
Section 1.01 Purchase and Sale.
Upon the terms and subject to the conditions hereof, at the Closing (as defined
in Section 2.01), the TX China Shareholders shall sell, transfer, assign and
convey to AAAC, and AAAC shall purchase from the TX China Shareholders, the TX
China Equity representing all of the registered capital of TX China and all of
the right, title and interest of the TX China
Shareholders in and to the TX China Equity.
Section 1.02 Purchase Price.
AAAC shall pay the total amount of US$13,000,000 dollars, or the equivalent RMB
(based on the US$/RMB exchange rate on the Closing Date), by cash to TX China
Shareholders on the Closing Date (as defined in Section 2.01).
Section 1.03 Payment of Purchase Price
AAAC shall deliver to TX China certified funds payable to TX China Shareholders
the purchase price under Section 1.02 on the Closing Date (as defined in Section
2.01).
ARTICLE 2
THE CLOSING
Section 2.01 The Closing.
Subject to the terms and conditions of this Agreement, the consummation of the
TX China Acquisition and the transactions contemplated by this Agreement shall
take place at a closing (the "Closing") to be held at 9 a.m., local time, on the
third Business Day after the date on which the last of the conditions to Closing
set forth in Article 8 is fulfilled, at the Beijing Office of King & Wood PRC
Lawyers or at such other time, date or place as the Parties may agree upon in
writing. The date on which the Closing occurs is referred to herein as the
"Closing Date."
Section 2.02 Deliveries.
(a) TX China Shareholders. At the Closing, each TX China Shareholder will
assign and transfer to AAAC all of such TX China Shareholder's right, title
and interest in and to his, her or its respective portion of the TX China
Equity by delivering to AAAC the certificates representing such TX China
Equity, free and clear of all liens.
(b) AAAC. At the Closing, AAAC shall deliver to TX China (i) the Purchase price
(as evidenced by a copy of the wire instructions to the Designated
Account), representing the Purchase Price to which each of the TX China
Shareholders is entitled pursuant to Section 1.02 and (ii) the
certificates, opinions and other agreements and instruments contemplated by
Article 8 hereof and the other provisions of this Agreement.
Section 2.03 Additional Documents.
At the Closing, the following documents (collectively, the "Transaction
Documents") will have been executed, delivered or otherwise effectuated:
(a) Certificate of Incorporation of Tongxin International Limited;
(b) Memorandum and Articles of Tongxin International Limited, as mutually
agreed by AAAC and TX China; and
(c) Written approval on the TX China Acquisition by authorized municipal bureau
of commerce of the PRC.
Section 2.04 Further Assurances.
Subject to the terms and conditions of this Agreement, at any time or from time
to time after the Closing, each of the Parties hereto shall execute and deliver
such other documents and instruments, provide such materials and information and
take such other actions as may reasonably be necessary, proper or advisable, to
the extent permitted by law, to fulfill its obligations under this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TX CHINA AND THE TX CHINA SHAREHOLDERS
Subject to the exceptions set forth in the Disclosure Schedule, TX China and the
TX China Shareholders represent and warrant to AAAC as of the date hereof and as
of the Closing as follows:
Section 3.01 The TX China Equity.
(a) Ownership. Each TX China Shareholder has exclusive legal right and title to
the TX China Equity, free from all Security Interest, such as liens,
charges and other encumbrances, and all claims of any creditor. Such TX
China Equity constitutes all of the registered capital of TX China.
(b) Capitalization. The registered capital of TX China is set forth in 3.01(b)
of the Disclosure Schedule. All the
registered capital of TX China has been duly paid in full.
Section 3.02 Organization of TX China.
TX China is a limited liability company duly organized, validly existing and in
good standing under the law of the PRC. TX China has the full power and right to
conduct its business in accordance with its business license, articles of
association or similar organizational documents.
Section 3.03 TX China Subsidiaries.
(a) Ownership. Except as otherwise disclosed in Section 3.03 of the Disclosure
Schedule, TX China shall be the only registered and beneficial owner of all
of the equity interests of each TX China Subsidiary free from all security
interest, such as liens, charges and other encumbrances, and all claims of
any creditor.
(b) Capitalization. The registered capital of each TX China Subsidiary is set
forth in Section 3.03 (b) of the Disclosure Schedule. All the registered
capital of each TX China Subsidiary has been duly paid in full.
(c) Organization of TX China Subsidiaries. Section 3.03 of the Disclosure
Schedule sets forth the name, the registered address, the legal
representative, the date of establishment, the valid duration and the
registered capital of such TX China Subsidiary. Each such TX China
Subsidiary is an entity duly organized, validly existing and in good
standing under the laws of the PRC. Each TX China Subsidiary has the full
power
and right to conduct its business in accordance with its business license,
articles of association or similar organizational documents.
Section 3.04 Reorganization.
The reorganization of TX China and the TX China Subsidiaries described in the
Memorandum of Reorganization attached hereto as Schedule E (the
"Reorganization") has been initiated. All required third party consents in
connection with the Reorganization have been duly obtained and are in full force
and effect. There is no litigation pending or threatened against TX China or any
of the TX China Subsidiaries in connection with or as a result of the
Reorganization.
Section 3.05 Authority and Corporate Action; No Conflict.
(a) Each of TX China and the TX China Shareholders has all necessary power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby.All action, corporate and otherwise, necessary to be
taken by TX China and TX China Shareholders to authorize the execution,
delivery and performance of this Agreement, the Transaction Documents and
all other agreements delivered in connection with this agreement has been
duly and validly taken. This Agreement has been duly executed and delivered
by TX China and each TX China Shareholder and constitutes the valid,
binding, and enforceable obligation of TX China and each TX China
Shareholder, enforceable in accordance with its terms.
(b) Neither the execution and delivery of this Agreement or
any of the Transaction Documents contemplated hereby by TX China or each TX
China Shareholder nor the consummation of the transactions contemplated
hereby will (i) conflict with the Articles of Association of TX China or
any applicable law, regulation, order, judgment or decree or (ii) result in
a breach or violation of or constitute a default under any instrument,
contract or other agreement to which TX China or an TX China Shareholder is
a party or by which it is subject or bound.
Section 3.06 No Undisclosed Major Liabilities.
Except as otherwise disclosed in Section 3.06 of the Disclosure Schedule,
neither TX China nor any TX China Subsidiary has any Major Liabilities in excess
of RMB 1,000,000 (inclusive of RMB 1,000,000) ("Major Liabilities").
Section 3.07 Real Property.
Section 3.07 of the Disclosure Schedule contains a list and description of (a)
all real properties with respect to which TX China or any TX China Subsidiary
holds valid land use rights as well as other real estate that is in the
possession of or leased by TX China or any TX China Subsidiary and the
improvements (including buildings and other structures) located on such real
estate (collectively, the "Real Property"), and (b) any leases under which such
Real Property is possessed (the "Real Estate Leases").
Section 3.08 Intellectual Property.
Section 3.08 of the Disclosure Schedule contains a list all Intellectual
Property owned by or licensed to TX China and TX China Subsidiaries. Except as
set forth in Section 3.08 of the Disclosure Schedule, TX China and TX China
Subsidiaries are the legitimate owners or licensees of the Intellectual
Property, free of any Security Interest. Neither the Intellectual Property nor
the use thereof by TX China and TX China subsidiaries infringes on any other
person's legitimate interests.
Section 3.09 Title and Condition to Assets.
Each of TX China and the TX China Subsidiaries has good and marketable title to
all the assets owned by it. Except as set forth in Section 3.09 of the
Disclosure Schedule, none of their Major Assets is subject to any Security
Interest, option to purchase or lease, restriction, or imperfection of title or
material adverse claim.
Section 3.10 Compliance with Law.
The business has been conducted, and is now being conducted, by TX China and TX
China Subsidiaries in compliance in all material respects with all applicable
Laws. None of TX, the TX China Subsidiaries and their respective officers,
directors and employees is, and during the past three (3) years was in any
material aspect in violation of all such applicable Laws with respect to the
conduct of the Business.
Section 3.11 Disclosure.
No representation or warranty by TX China or each TX China Shareholder contained
in this Agreement and no information contained in any Schedule or other
instrument furnished or to be furnished to AAAC pursuant to this Agreement or in
connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained therein not
misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF AAAC
AAAC represents and warrants to TX China and each TX China Shareholder as of the
date hereof and as of the Closing as follows:
Section 4.01 Organization.
AAAC is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, US, which shall redomesticate as a
corporation, duly organized, validly existing and in good standing under the
laws of the British Virgin Islands.
Section 4.02 Authority and Corporate Action; No Conflict.
(a) AAAC has all necessary power and authority to enter into this Agreement and
to consummate the transactions contemplated hereby. All action, corporate
and otherwise, necessary to be taken by AAAC to authorize the execution,
delivery and performance of this Agreement, the Transaction Documents and
all other agreements delivered in connection with this agreement has been
duly and validly taken. This Agreement has been duly executed and delivered
by AAAC and constitutes the valid, binding, and enforceable obligation of
AAAC, enforceable in accordance with its terms.
(b) Neither the execution and delivery of this Agreement or any of the
Transaction Documents contemplated hereby by nor the consummation of the
transactions contemplated hereby will (i) conflict with the Articles of
Association of AAAC or any applicable law, regulation, order, judgment or
decree or (ii) result in a breach or violation of or constitute a default
under any instrument, contract or other agreement to which AAAC is a party
or by which it is subject or bound.
Section 4.03 SEC Reports.
(a) AAAC has delivered to TX China or there have been available by public means
(i) AAAC's prospectus, dated April 11, 2006, relating to AAAC's initial
public offering, and (ii) all other reports filed by AAAC under the
Securities Act and the Exchange Act (all of such materials, together with
any amendments thereto and documents incorporated by reference therein, are
referred to herein as the "SEC Reports").
(b) As of its filing date or, if applicable, its effective date, each SEC
Report complied in all respects with the requirements of the Laws
applicable to AAAC for such SEC Report, including the Securities Act and
the Exchange Act.
(c) Each SEC Report as of its filing date and the prospectus
referred to in Section 4.03(a), as of its effective date, did not contain
any untrue statement of facts or omit to state any material fact necessary
in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. AAAC has filed
all reports under the Exchange Act that were required to be filed as of the
date hereof and will have filed all such reports required to have been
filed through the Closing Date and has otherwise complied with all
requirements of the Securities Act and the Exchange Act.
Section 4.04 Compliance with Law.
The business of AAAC has been conducted, and is now being conducted, in
compliance with all applicable Laws. AAAC and its officers, directors and
employees are not, and during the periods of AAAC's existence were not, in
violation of, or not in compliance with all such applicable Laws with any
material aspect with respect to the conduct of the businesses of AAAC.
Section 4.05 Disclosure.
No representation or warranty by AAAC contained in this Agreement and no
information contained in any Schedule or other instrument furnished or to be
furnished to TX China or the TX China Shareholders pursuant to this Agreement or
in connection with the transactions contemplated hereby contains or will contain
any untrue statement of a material fact or omits or will omit to state a
material fact necessary in order to make the statements contained therein not
misleading.
ARTCLE 5
COVENANTS OF TX CHINA AND THE TX CHINA SHAREHOLDERS
Section 5.01 Conduct of the Business.
TX China and each TX China Stockholder covenants and agrees that, from the date
hereof through the Closing Date, except as otherwise required as set forth in
this Agreement or with the prior written consent of AAAC, they shall use their
best efforts to cause each TX China Subsidiary to:
(a) conduct the business in the ordinary course and in a manner consistent with
the current practice of the Business, to preserve substantially intact the
business organization of TX China and each TX China Subsidiary, to keep
available the services of the current employees of TX China and each TX
China Subsidiary, to preserve the current relationships of TX China and
each TX China Subsidiary with customers and other persons with which TX
China and each TX China Subsidiary has significant business relations and
to comply with all material respects of Laws;
(b) not pledge, sell, transfer, dispose or otherwise encumber or grant any
rights or interests to others of any kind with respect to all or any part
of the TX China Equity or any equity interest of any TX China Subsidiary,
or enter into any discussions or negotiations with any other party to do
so;
(c) not pledge, sell, lease, transfer, dispose of or otherwise
encumber any assets of TX China or any TX China Subsidiary, other than
consistent with past practices and in the ordinary course of business of TX
China or any concerned TX China Subsidiary or enter into any discussions or
negotiations with any other party to do so; and
(d) not merge or consolidate with, or acquire all or substantially all the
assets of, or otherwise acquire any business operations of, any Person; and
Section 5.02 Fulfillment of Conditions.
From the date hereof to the Closing Date, TX China and the TX China shareholders
shall use its best efforts to fulfill the conditions specified in Article 8 to
the extent that the fulfillment of such conditions is within its control. The
foregoing obligation includes (a) the execution and delivery of documents
necessary or desirable to consummate the transactions contemplated hereby, and
(b) taking or refraining from such actions as may be necessary to fulfill such
conditions (including using their best efforts to conduct the business in such
manner that on the Closing Date the representations and warranties of TX China
and each TX China Shareholder contained herein shall be accurate as though then
made, except as contemplated by the terms hereof).
Section 5.03 Disclosure of Certain Matters.
From the date hereof through the Closing Date, TX China and each TX China
Shareholder shall give AAAC prompt written notice of any event or development
that occurs that (a) had it
existed or been known on the date hereof would have been required to be
disclosed under this Agreement, (b) would cause any of the representations and
warranties of TX China and each TX China shareholder contained herein to be
inaccurate or otherwise misleading, (c) gives AAAC any reason to believe that
any of the conditions set forth in Article 8 will not be satisfied, (d) is of a
nature that is or may be materially adverse to the operations, prospects or
condition (financial or otherwise) of TX China or TX China Subsidiary, or (e)
would require any amendment or supplement to the Proxy Statement/Prospectus.
Section 5.04 Regulatory and Other Authorizations; Notices and Consents.
(a) TX China and each TX China Shareholder shall use their best efforts to
obtain all authorizations, consents, orders and approvals of all
Governmental Authorities and officials that may be or become necessary for
their execution and delivery of, and the performance of their obligations
pursuant to, this Agreement and the Transaction Documents and will
cooperate fully with AAAC in promptly seeking to obtain all such
authorizations, consents, orders and approvals.
(b) TX China and each TX China Shareholder shall give promptly such notices to
third parties and use its or their best efforts to obtain such third party
consents and estoppel certificates as AAAC may in reasonable discretion
deem necessary or desirable in connection with the transactions
contemplated by this Agreement.
Section 5.05 Employment Agreements.
(a) Each of the Managers of TX China and the TX China Subsidiaries shall have
entered into a management employment agreement (the "Management Employment
Agreement") in form of Schedule F with TX China or the relevant TX China
Subsidiary, as the case may be. These agreements generally are to provide
employment terms of 5 years include Intellectual Property assignment and
non-competition provisions for not less than 3 years after termination of
employment; and
(b) Each of all other employees of TX China and the TX China Subsidiaries shall
have entered into labor contract (the "Labor Contract") with TX China or
the relevant TX China Subsidiary, as the case may be, in the standard form
designated by the relevant Government Authority in the locality where such
employee is employed. Such these standard forms are attached to this
Agreement as Schedule G.
ARTICLE 6
COVENANTS OF AAAC
Section 6.01 Conduct of the Business.
AAAC covenants and agrees that, from the date hereof through the Closing Date,
unless otherwise set forth in this Agreement or with the prior written consent
of TX China, it shall:
(a) not pledge, sell, transfer, dispose or otherwise encumber or grant any
rights or interests to others of any kind with respect to all or any part
of the capital securities of AAAC;
(b) not pledge, sell, lease, transfer, dispose of or otherwise encumber any
assets of AAAC;
(c) except for the purposes as set forth in this Agreement, not issue any share
capital of AAAC or any other class of securities, whether debt (other than
debt incurred in the ordinary course of business and consistent with past
practice) or equity, of AAAC or any options therefor or any securities
convertible into or exchangeable for share capital of AAAC or enter into
any agreements in respect of the ownership or control of such share
capital; provided that such restriction shall not apply if the ultimate
beneficiaries of such issuance are employees, officers, directors or
consultants of AAAC at that time;
(d) not declare any dividend or make any distribution in cash, securities or
otherwise on the outstanding AAAC Ordinary Shares or directly or indirectly
redeem, purchase or in any other manner whatsoever advance, transfer (other
than in payment for goods received or services rendered in the ordinary
course of business), or distribute to any of their affiliates or otherwise
withdraw cash or cash equivalents in any manner inconsistent with
established cash management practices, except to pay existing indebtedness
of AAAC;
(e) not merge or consolidate with, or acquire all or substantially all the
assets of, or otherwise acquire any business operations of, any Person;
(f) not make any material capital expenditures, except in
accordance with prudent business and operational practices consistent with
prior practice; and
(g) Each stock (including stocks obtained after the exercise of option and
warrant) owned by the shareholders of TX International shall have one
voting right after the Closing.
Section 6.02 14A Proxy Statement Filing
AAAC shall use its commercially reasonable efforts to file a Schedule 14(a)
Proxy Statement with the SEC within fifteen (15) days after the completion by TX
China of an US GAAP audit. Subsequent to a final review by the SEC, AAAC shall
call a Special Meeting of its Shareholders as governed in Section 6.03 below.
Section 6.03 AAAC Special Shareholders' Meeting.
AAAC shall cause a meeting of its shareholders (the "AAAC Special Shareholders'
Meeting") to be duly called and held as soon as reasonably practicable for the
purpose of voting on the adoption of, among others, this Agreement and the
Memorandum and Articles as required by the Current Articles. The directors of
AAAC shall recommend to its shareholders that they vote in favor of the adoption
of such matters. In connection with such meeting, AAAC (a) will file with the
United States Securities and Exchange Commission (the "SEC") as promptly as
practicable a proxy statement meeting the requirements of the Exchange Act (the
"Proxy Statement") and all other proxy materials for such meeting, (b) upon
receipt of approval from the SEC, will mail to its shareholders the Proxy
Statement and
other proxy materials, (c) will use its best efforts to obtain the
necessary approvals by its shareholders of this Agreement and the transactions
contemplated hereby, and (d) will otherwise comply with all legal requirements
applicable to such meeting.
Section 6.04 Fulfillment of Conditions.
From the date hereof to the Closing Date, AAAC shall use its best efforts to
fulfill the conditions specified in Article 8 to the extent that the fulfillment
of such conditions is within its control. The foregoing obligation includes (a)
the execution and delivery of documents necessary or desirable to consummate the
transactions contemplated hereby, and (b) taking or refraining from such actions
as may be necessary to fulfill such conditions.
Section 6.05 Disclosure of Certain Matters.
From the date hereof through the Closing Date, AAAC shall give TX China and the
TX China Shareholders prompt written notice of any event or development that
occurs that (a) had it existed or been known on the date hereof would have been
required to be disclosed under this Agreement, (b) would cause any of the
representations and warranties of AAAC contained herein to be inaccurate or
otherwise misleading, (c) gives AAAC any reason to believe that any of the
conditions set forth in Article 8 will not be satisfied, (d) is of a nature that
is or may be materially adverse to the operations, prospects or condition
(financial or otherwise) of AAAC, (e) would require any amendment or supplement
to the Proxy Statement, or (f) information that becomes available through
discussions with AAAC investors.
Section 6.06 Regulatory and Other Authorizations; Notices and Consents.
(a) AAAC shall use its commercially reasonable efforts to obtain all
authorizations, consents, orders and approvals of all Governmental
Authorities and officials that may be or become necessary for its execution
and delivery of, and the performance of its obligations pursuant to, this
Agreement and the Transaction Documents and will cooperate fully with TX
China or TX China Shareholders in promptly seeking to obtain all such
authorizations, consents, orders and approvals.
(b) AAAC shall give promptly such notices to third parties and use its best
efforts to obtain such third party consents and estoppel certificates as TX
China or TX China Shareholders may in their reasonable discretion deem
necessary or desirable in connection with the transactions contemplated by
this Agreement.
Section 6.07 Key Employees Employment Agreement
AAAC shall execute Key Employees Employment Agreements with certain Executives
and Key Employees by issuing stocks of AAAC according to its compensation plan,
incentive plan, and stock option (warrant) plan, as AAAC considers necessary.
Section 6.08 Future Incentive Plan.
At the first board meeting of TX International, the Board will
discuss and decide upon an incentive plan with certain Executives and Key
Employees to urge TX China to achieve a predetermined level of net income for
fiscal years 2008 and 2009.
Section 6.09 Survival of Representations and Warranties.
The representations and warranties of AAAC set forth in this Agreement shall
survive the Closing.
ARTICLE 7
ADDITIONAL AGREEMENTS AND COVENANTS OF THE PARTIES
Section 7.01 Change of Name.
Upon the Closing, the name of AAAC shall be changed to a name mutually agreed by
the Parties, which shall include the name "Hunan Tongxin".
Section 7.02 Other Information.
If in order to properly prepare documents required to be filed with any
Governmental Authority or financial statements of TX China, it is necessary that
any Party be furnished with additional information relating to TX China or the
Business, and such information is in the possession of any other Party or
Parties, such Party may request such other Party or Parties to, and such other
Party or Parties hereby agree to use its or their best efforts to, furnish such
information in a timely
manner to the requesting Party, at the cost and expense of the requesting Party.
Section 7.03 Mail Received After Closing.
(a) If AAAC or TX China receives after the Closing any mail or other
communications addressed to any TX China Shareholder, AAAC shall promptly
notify the TX China Shareholders.
(b) If any TX China Shareholder receives after the Closing Date mail or other
communications addressed to them which relate to TX China or the TX China
Subsidiaries, they shall promptly deliver or cause to be delivered all such
mail and the contents thereof to AAAC, and TX China.
Section 7.04 Further Action.
Each of the Parties shall execute such documents and other papers and take such
further actions as may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated hereby. Upon the terms and
subject to the conditions hereof, each of the Parties shall use its best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement.
Section 7.05 Schedules.
The Parties shall have the obligation to supplement or amend
the Schedules being delivered concurrently with the execution of this Agreement
and annexed hereto with respect to any matter hereafter arising or discovered
which, if existing or known at the date of this Agreement, would have been
required to be set forth or described in the Schedules. The obligations of the
Parties to amend or supplement the Schedules being delivered herewith shall
terminate on the Closing Date. Notwithstanding any such amendment or
supplementation, the representations and warranties of the Parties shall be made
with reference to the Schedules as they exist at the time of execution of this
Agreement.
Section 7.06 Execution of Agreements.
On or before the Closing Date, AAAC, TX China and each TX China Shareholder
shall execute and deliver each Transaction Document to which it is a party.
Section 7.07 Confidentiality.
TX China and each TX China Shareholder, on the one hand, and AAAC, on the other
hand, on and before the Closing Date, shall hold and shall cause their
respective Representatives to hold in strict confidence, unless compelled to
disclose by judicial or administrative process or by other requirements of law,
all documents and information concerning the other Party furnished it by such
other Party or its Representatives in connection with the transactions
contemplated by this Agreement (except to the extent that such information can
be shown to have been (a) previously known by the Party to which it was
furnished, (b) in the public domain through no fault of
such Party or (c) later lawfully acquired from other sources, which source is
not the agent of the other Party, by the Party to which it was furnished), and
each Party shall not release or disclose such information to any other person,
except its Representatives in connection with this Agreement. Each Party shall
be deemed to have satisfied its obligations to hold confidential information
concerning or supplied by the other Party if it exercises the same care as it
takes to preserve confidentiality for its own similar information.
Section 7.08 Public Announcements.
From the date of this Agreement until Closing or termination, AAAC, TX China and
each TX China Shareholder shall cooperate in good faith to jointly prepare all
press releases and public announcements pertaining to this Agreement and the
transactions governed by it, and none of the foregoing shall issue or otherwise
make any public announcement or communication pertaining to this Agreement or
the transaction without the prior consent of AAAC (in the case of TX China and
each TX China Shareholder) or TX China (in the case of AAAC), except as required
by Law or by the rules and regulations of, or pursuant to any agreement of a
stock exchange or trading system. Each Party will not unreasonably withhold
approval from the others with respect to any press release or public
announcement. If any Party determines with the advice of counsel that it is
required to make this Agreement and the terms of the transaction public or
otherwise issue a press release or make public disclosure with respect thereto,
it shall at a reasonable time before making any public disclosure, consult with
the other Parties regarding such disclosure, seek
such confidential treatment for such terms or portions of this Agreement or the
transaction as may be reasonably requested by the other Parties and disclose
only such information as is legally compelled to be disclosed. This provision
will not apply to communications by any Party to its counsel, accountants and
other professional advisors.
Section 7.09 Board of Directors and Executive Officers of TX China.
TX International shall appoint Mr. Duanxiang Zhang, Xx. Xxxxx Xxxx, and Xx.
Xxxxxxx Xxx to serve as the Chairman of the board, CEO, and CFO of TX China
respectively in responsible for the overall operation of TX China, a wholly
owned subsidiary of TX International, for a term of at least three (3) years.
Subject to the approval of TX International's Board, TX International shall
further undertake that the above officers shall not be removed, unless for the
causes of material illegal activities and misconduct, from the positions of TX.
Section 7.10 Board of Directors of TX International.
(a) From Closing through a period of two (2) calendar years ("Initial Board")
the board of TX International will be comprised of 9 directors. TX
International shall appoint Four (4) directors nominated by TX China
including two (2) independent directors; and Five (5) directors nominated
by AAAC's former shareholders, including Xx. Xxxxxx (Chairman), Xx.Xxxxxx
and three (3) independent directors.
(b) Following the Initial Board period, the board of TX International will be
comprised of 7 directors. TX International shall appoint Four (4) directors
nominated by TX China including two (2) independent directors; and Three
(3) directors nominated by AAAC's former shareholders, including two (2)
independent directors.
Section 7.11 Corporate Governance Practice.
(a) Each of the Parties hereby agrees and undertakes that, following the
Closing, it or he or she (as the case may be) shall fully comply with, and
shall cause to be complied with, all of the corporate governance policies,
procedures, rules and requirements of AAAC adopted or to be adopted from
time to time by the Board (collectively, the "Corporate Governance Rules"),
including but not limited to those set forth in Schedule H attached hereto.
(b) After the Closing Date, AAAC agrees not to sign a letter of intent, or
other agreement with any third Person regarding a sale of the shares,
assets or other interest in such Person or a business combination with such
third Person.
Section 7.12 Future Transaction
TX China will cause Changsha Meihua Automobile Company to form a 50%/50% joint
venture with TX International in China.
ARTICLE 8
CONDITIONS TO CLOSING
Section 8.01 Conditions to Each Party's Obligations.
The respective obligations of each Party to consummate the transactions
contemplated by this Agreement shall be subject to the fulfillment or waiver, at
or prior to the Closing, of each of the following conditions.
(a) Permits of PRC Government Authorities. All the required Permits of the
relevant PRC government authorities in connection with the TX China
Acquisition shall have been duly obtained.
(b) Approval by AAAC's Shareholders. This Agreement and the transactions
contemplated hereby shall have been approved by a majority-in-interest of
the shareholders of AAAC in accordance with AAAC's Articles of Association
and the aggregate number of AAAC Ordinary Shares held by public
shareholders of AAAC who exercise their redemption rights with respect to
their AAAC Ordinary Share in accordance with the Articles of Association
shall not constitute twenty percent (20%) or more of the AAAC Ordinary
Shares sold in AAAC's Public Offering. It is being expressly understood by
and among the Parties hereto, that the transactions contemplated by this
agreement are subject and contingent upon the approval of the shareholders
of AAAC. In the event the majority of the shareholders of AAAC fail to
ratify and confirm the transactions contemplated by this agreement, this
agreement shall become null and void with no liability to either party.
(c) Memorandum and Articles of TX International. The Memorandum and Articles of
TX International shall have taken effect on the Closing Date.
(d) Transaction Documents. Each of the Transaction Documents shall have been
executed and delivered to each relevant Party.
Section 8.02 Conditions to Obligations of TX China and the TX China
Shareholders.
The obligations of TX China and each TX China Shareholder to consummate the
transactions contemplated by this Agreement shall be subject to the fulfillment
or waiver, at or prior to the Closing, of each of the following conditions:
(a) Deliveries. shall have made the payments specified in Section 1.02 of this
Agreement and the TX China Shareholders shall have received such documents,
certificates and instruments as may be reasonably requested by TX China and
TX China Shareholders.
(b) Regulatory Approvals. Any Governmental Authority whose approval or consent
is required shall have approved of the transactions contemplated by this
Agreement. The registrations, filings and updates with any government
authorities as required in connection with the transactions contemplated by
this Agreement, shall have been duly completed;
(c) Necessary Proceedings. All proceedings, corporate or
otherwise, to be taken by AAAC a in connection with the consummation of the
transactions contemplated by this Agreement shall have been duly and
validly taken, and copies of all documents, resolutions and certificates
incident thereto, duly certified by AAAC as of the Closing, shall have been
delivered to TX China and the TX China Shareholders.
Section 8.03 Conditions to Obligations of AAAC.
The obligations of AAAC to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver, at or prior to the
Closing, of each of the following conditions:
(a) Deliveries. The TX China Shareholders shall have delivered to AAAC the TX
China Stocks and AAAC shall have received the same and such other
documents, certificates and instruments as may be reasonably requested by
AAAC;
(b) Regulatory Approvals. Any governmental authority whose approval or consent
is required shall have approved of the transactions contemplated by this
Agreement. The registrations, filings and updates with any government
authorities as required in connection with the transactions contemplated by
this Agreement, shall have been duly completed;
(c) Necessary Proceedings. All proceedings, corporate or otherwise, to be taken
by TX China and each TX China Shareholder in connection with the
consummation of the transactions contemplated by this Agreement shall have
been
duly and validly taken, and copies of all documents, resolutions and
certificates incident thereto, duly certified by TX China and each TX China
Shareholder, as appropriate, as of the Closing, shall have been delivered
to AAAC.
ARTICLE 9 TERMINATION AND ABANDONMENT
Section 9.01 Methods of Termination.
The transactions contemplated herein may be terminated and/or abandoned at any
time but not later than the Closing:
(a) by mutual written consent of the Parties;
(b) by either AAAC or TX, if the Closing has not occurred by February 6, 2008
(or such other date as may be extended from time to time by written
agreement of the Parties); provided, however, that the right to terminate
this Agreement under this Section 9.01(b) shall not be available to any
Party that is then in breach of any of its covenants, representations or
warranties in this Agreement;
(c) by TX China or AAAC (i) if there has been a breach of any of its covenants
in this Agreement or (ii) if the representations and warranties of AAAC
contained in this Agreement shall not be true and correct in material
respects, at the time made, or (iii) if such representations and warranties
shall not be true and correct at and as of the Closing Date as though such
representations and warranties were made again at and as of the Closing
Date, except to the extent that such representations are made herein as of
a
specific date prior to the Closing Date, and in any such event, if such
breach is subject to cure, AAAC has not cured such breach within ten (10)
Business Days of TX's notice of an intent to terminate;
(d) by TX China, if the Board (or any committee thereof) at the time of the
signing of this Agreement shall have failed to recommend or withdrawn or
modified in a manner adverse to TX China its approval or recommendation of
this Agreement and any of the transactions contemplated hereby;
(e) by either AAAC or TX China, if, at the AAAC Shareholders' Meeting
(including any adjournments thereof), this Agreement and the transactions
contemplated hereby shall fail to be approved and adopted by the
affirmative vote of the holders of AAAC Ordinary Shares required under its
Articles of Association, and the aggregate number of AAAC Ordinary Shares
held by public shareholders of AAAC who exercise their redemption rights
with respect to their AAAC Ordinary Shares in accordance with the Articles
of Association constitutes twenty percent (20%) or more of the AAAC
Ordinary Shares sold in AAAC's Public Offering.
Section 9.02 Effect of Termination.
In the event of termination and abandonment by AAAC or by TX China, or both,
pursuant to Section 9.01 hereof, written notice thereof shall forthwith be given
to the other Party, and except as otherwise provided in this Agreement or
pursuant to relevant Laws, all further obligations of the Parties shall
terminate, no Party shall have any right against the other
Party hereto.
ARTICLE 10
DEFINITIONS
Section 10.01 Certain Defined Terms.
As used in this Agreement, the following terms shall have the following
meanings:
"AAAC Ordinary Shares" shall mean ordinary shares of AAAC, par value US $0.001
per share.
"AAAC's Public Offering" shall mean the initial public offering of AAAC
completed on April 18, 2006, in which AAAC sold 5,031,250 units at a price of
US$8.00 per unit. Each unit consists of one (1) AAAC Ordinary Share and one (1)
warrant.
"Affiliate" shall mean any Person that directly or indirectly through one or
more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by Contract or otherwise and, in
any event and without limitation of the previous sentence, any Person owning
twenty percent (10%) or more of the voting securities of a second Person shall
be deemed to control that second Person. For the purposes of this definition, a
Person shall be deemed to
control any of his or her immediate family members.
"Board" shall mean the board of directors of AAAC (or TX International after the
TX China Acquisition).
"Business Day" shall mean a day of the year on which banks are not required or
authorized to be closed in the City of New York, Hong Kong and the PRC.
"Certificate of Incorporation" shall mean the Certificate of Incorporation of TX
International in the form of Schedule C attached hereto.
"Disclosure Schedule" shall mean the Disclosure Schedule attached hereto as
Schedule D, dated as of the date hereof, delivered to AAAC by TX China in
connection with this Agreement.
"Exchange Act" shall mean the United States Securities Exchange Act of 1934, as
amended.
"Executives and Key Employees" shall mean the senior officers and employees of
TX International at various posts, including but not limited to chief executive
officer, chief operating officer, chief engineer, financial controller, plant
manger, who play critical role to TX China's business.
"Governmental Authority" shall mean any PRC or non-PRC national, supranational,
state, provincial, local or similar government, governmental, regulatory or
administrative authority, agency or commission or any court, tribunal or
judicial or arbitral body.
"TX China" shall mean Hunan TX Enterprise Co., Ltd.
"Intellectual Property" shall mean patents, copyrights, trademarks and service
marks, exclusive of know-how, trade secrete, and confidential and proprietary
processes and technology.
"Laws" shall mean all applicable statutes, rules, regulations, ordinances,
orders, writs, injunctions, judgments, decrees and awards of the PRC, USA or
other applicable jurisdictions.
"Liabilities" of any Person shall mean all obligations of such Person (i) for
borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables, installment payments or accruals incurred in the ordinary
course of business), (iv) under capital leases, or (v) in the nature of
guarantees of the obligations described in clauses (i) through (iv) above of any
other Person.
"Major Assets" shall mean any tangible and intangible assets owned by TX China
or TX China subsidiaries worth RMB 1,000,000 or more.
"Memorandum and Articles" shall mean the Memorandum and Articles of Association
of TX International mutually agreed by AAAC and TX China.
"Permits" shall mean all governmental registrations, licenses, permits,
authorizations and approvals.
"Person" shall mean an individual, partnership, corporation, joint venture,
unincorporated organization, cooperative or a governmental entity or agency
thereof.
"PRC" shall mean the People's Republic of China, for the purposes of this
Agreement, excluding the Hong Kong Special Administrative Region and the Macao
Special Administrative Region and Taiwan.
"Representatives" of either Party shall mean such Party's employees,
accountants, auditors, actuaries, counsel, financial advisors, bankers,
investment bankers and consultants.
"RMB" shall mean the official currency of the PRC.
"Securities Act" shall mean the US Securities Act of 1933, as amended.
"Security Interest" shall mean any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any condition sale Contract, title retention Contract or other Contract
to give any of the foregoing.
"Tax" or "Taxes" shall mean all income, gross receipts, sales, stock transfer,
excise, bulk transfer, use, employment, social security, franchise, profits,
property or other taxes,
tariffs, imposts, fees, stamp taxes and duties, assessments, levies or other
charges of any kind whatsoever (whether payable directly or by withholding),
together with any interest and any penalties, additions to tax or additional
amounts imposed by any government or taxing authority with respect thereto.
"TX International" shall mean TX International Ltd., the successor of AAAC after
TX China Acquisition.
"TX China's Auditors" shall mean Xxxxxx Xxxxx CPA Limited.
"US" or "United States" shall mean the United States of America.
"US$" shall mean the official currency of the United States.
"US GAAP" shall mean generally accepted accounting principles, consistently
applied in the United States.
ARTICLE 11
GENERAL PROVISIONS
Section 11.01 Expenses.
Except as otherwise provided herein, all costs and expenses, including, without
limitation, fees and disbursements of Representatives, incurred in connection
with the preparation
of this Agreement and the transactions contemplated hereby shall be paid by the
Party incurring such costs and expenses, whether or not the Closing shall have
occurred. TX China and AAAC shall each share 50% of the cost for hiring a chief
financial officer before the Closing.
TX China shall pay all the cost relating to the auditing. However, in the event
that for any reason that the transactions contemplated hereby could not be
completed, TX China shall pay 75% of the cost of the auditing and AAAC shall pay
25% of the auditing, unless the auditor cannot issue a "no reservation" opinion.
Section 11.02 Notices.
All notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given or made as of the date
delivered or mailed if delivered personally or by nationally recognized courier
or mailed by registered mail (postage prepaid, return receipt requested) or by
telecopy to the Parties at the following addresses (or at such other address for
a Party as shall be specified by like notice, except that notices of changes of
address shall be effective upon receipt):
If to TX China and the TX China Shareholders:
Xxxx Xxxxx
Hunan TX Enterprise Co., Ltd.
Xxxxxxxx Xxxxxxx, Xxxxxxxx Xxxxxx
Xxxxx 000000, Xxxxx
Tel: 00-000-0000000
Fax: 00-000-0000000
With a copy to:
Xxxxxxx Law
Xxxx & Xxxx
40th Floor, Office Tower A, Beijing Fortune
Plaza
7 Dongsanhuan Zhonglu
Xxxxxxxx Xxxxxxxx
Xxxxxxx 000000, Xxxxx
Tel. 0000-0000-0000
Fax: 8610-5878-5566
If to AAAC:
Xxxx Xxxxxx
Asia Automotive Acquisition Corporation
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx, 000000, XXX
Tel: 0-000-000-0000
Fax: 0-000-000-0000
With a copy to:
Xxxxx X. Xxxxxx
Norton & Norton Layers P.C.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx, 000000, XXX
Tel: 000-000-0000
Fax: 000-000-0000
Section 11.03 Amendment.
This Agreement may not be amended or modified except by an instrument in writing
signed by the Parties.
Section 11.04 Waiver.
At any time prior to the Closing, either Party may (a) extend the time for the
performance of any of the obligations or other acts of the other Party, (b)
waive any inaccuracies in the representations and warranties contained herein or
in any document delivered pursuant hereto and (c) waive compliance with any of
the agreements or conditions contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the Party
to be bound thereby.
Section 11.05 Headings.
The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Section 11.06 Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any Party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the Parties shall negotiate in good faith to modify
this Agreement so as to effect the original intent of the Parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
Section 11.07 Entire Agreement.
This Agreement and the Schedules and Exhibits hereto constitute the entire
agreement and supersede all prior agreements and undertakings, both written and
oral, between TX China and any TX China Shareholder and AAAC with respect to the
subject matter hereof and, except as otherwise expressly provided herein, are
not intended to confer upon any other person any rights or remedies hereunder.
Section 11.08 Successors.
The terms of this Agreement will remain in effect and shall be binding upon the
successor of AAAC. Notwithstanding and subject to the foregoing, this Agreement
shall be binding upon and shall inure to the benefit of the AAAC and its legal
representatives, successor, and shall not benefit any person or entity other
than those enumerated above.
Section 11.09 Arbitration.
(a) Any dispute, controversy or claim arising out of or
relating to this Agreement, or the interpretation, breach, termination or
validity hereof, shall be resolved through consultation. Such consultation
shall begin immediately after one Party hereto has delivered to the other
Party hereto a written request for such consultation. If within thirty (30)
days following the date on which such notice is given the dispute cannot be
resolved, the dispute shall be submitted to arbitration upon the request of
any Party with notice to the others.
(b) The arbitration shall be conducted in Hong Kong by the Hong Kong
International Arbitration Center in accordance with its arbitration rules
then in effect. The arbitration proceedings shall be conducted in Chinese.
(c) The award of the arbitration tribunal shall be final and binding upon the
disputing Parties, and any Party may apply to a court of competent
jurisdiction for enforcement of such award.
Section 11.10 Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of
the People's Republic of China without regard to the conflicts of laws rules and
principles thereof.
Section 11.11 Language.
This Agreement is written in English and Chinese languages. Both versions shall
be equally valid and binding.
Section 11.12 Counterparts.
This Agreement may be executed in one or more counterparts, and by the different
Parties in separate counterparts, each of which when executed shall be deemed to
be an original but all of which when taken together shall constitute one and the
same agreement.
(The following are the signature pages of the Equity Acquisition Agreement.)
ASIA AUTOMOTIVE ACQUISITION CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Chairman of the Board
By: /s/ Xxxx Xxxxxx
Xxxx Xxxxxx
Chief Executive Officer
HUNAN TX ENTERPRISE CO., LTD. (SEAL)
Legal Representative:
Name: Duanxiang Zhang
TX CHINA SHAREHOLDERS SIGNATURE
Duanxiang Zhang
Xxxx Xxx
Xxxxxxx Xxxxx
Xxxx Xxx
Xxxxxx Xxxxx
Xxxxx Xxxx
Xxxxxxxxx Xxx
Xxxxxx Xxx
Xxxxxxx Xxx
Xxxxxx Xxx
Luoxiang Xxxx
Xxxxxxx Xxxx
Xxxxx Zhu
Xxxxxx Xxxxx
Xxxxxx Xxxx
Xxxxxx Xxxxx
Xxxxxx Xxxx
Xxxxxxxxx Xx
Xxxxxx Xxxxx*
Xxxxxxxxxx Xxxx
Xxxxxx Xxxx
Xxxxx Xxxxx
Luoxun Sheng
Fake Xxxxx
Xxxxxxx Pei
Xxxxxxx Xxxxx
Xxxxxxx Xx
Xxxxxxxxxx Xxxxx
Xxxxx Xxxx
Xxxxxxxx Xxx
Xxxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxx Xxx
Xxxxxxx Xxxxx
Xxxxx Xx
Yunjun Pei
Xxxxxxxx Xxxx
Xxxxxx Xxxx
Zihuai Peng
Zhonghua Li
Xxxxxxx Xx
Duyun Zhang
Zhongyi Xxxxx
Xxxxxx You
Xxxxxxx Xxxx
Xxxxxxxx Xxx
SCHEDULE A TX CHINA SHAREHOLDERS
Duanxiang Zhang
Xxxx Xxx
Xxxxxxx Xxxxx
Xxxx Xxx
Xxxxxx Xxxxx
Xxxxx Xxxx
Xxxxxxxxx Xxx
Xxxxxx Xxx
Xxxxxxx Xxx
Xxxxxx Xxx
Luoxiang Xxxx
Xxxxxxx Xxxx
Xxxxx Zhu
Xxxxxx Xxxxx
Xxxxxx Xxxx
Xxxxxx Xxxxx
Xxxxxx Xxxx
Xxxxxxxxx Xx
Xxxxxx Xxxxx*
Xxxxxxxxxx Xxxx
Xxxxxx Xxxx
Xxxxx Xxxxx
Luoxun Sheng
Fake Xxxxx
Xxxxxxx Pei
Xxxxxxx Xxxxx
Xxxxxxx Xx
Xxxxxxxxxx Xxxxx
Xxxxx Xxxx
Xxxxxxxx Xxx
Xxxxxx Xxxxx
Xxxxxx Xxxxx
Xxxxxx Xxx
Xxxxxxx Xxxxx
Xxxxx Xx
Yunjun Pei
Xxxxxxxx Xxxx
Xxxxxx Xxxx
Zihuai Peng
Zhonghua Li
Xxxxxxx Xx
Duyun Zhang
Zhongyi Xxxxx
Xxxxxx You
Xxxxxxx Xxxx
Xxxxxxxx Xxx
SCHEDULE B TX CHINA SUBSIDIARIES
Hunan TX Mould Manufacturing Co., Ltd.
Zhucheng TX Autobody Co., Ltd.
Hunan TX Ziyang Autobody Co., Ltd.
SCHEDULE C CERTIFICATE OF INCORPORATION OF TX INTERNATIONAL
SCHEDULE D DISCLOSURE SCHEDULE
The disclosures in this Disclosure Schedule shall modify and relate to the
representations and warranties in Section 3 of
the Equity Acquisition Agreement (the "EAA") among AAAC, TX China and TX China
Shareholders. This Disclosure Schedule is intended to give AAAC a complete and
precise understanding of TX China and TX China Subsidiaries. The numbers listed
below correspond to the enumerated sections and subsections of Section 3 of the
EAA. Capitalized terms used herein without definition shall have the meanings
ascribed to them in the EAA.
The information and disclosures contained in this Disclosure Schedule are
intended only to qualify and limit the representations and warranties of TX
China and TX China Shareholders contained in Section 3 of the EAA and shall not
be deemed to expand in any way the scope or effect of any of such
representations or warranties.
3.01 Hunan Tongxin Stock Right
(a) Ownership
No exception
(b) Stock
Hunan Tongxin registered capital is 72,521,700 RMB. Actual received capital
is 72,521,700 RMB.
3.02 Hunan Tongxin Organization
No exception
3.03 Hunan Tongxin Subsidiaries
(a) Ownership
Hunan Hunan Tongxin Enterprise Co., Ltd (the predecessor of TX China) and Hunan
Foton Dynamic Co., Ltd hold 50% equity interest of Changsha Foton Fengjing Bus
Co., Ltd respectively. Changsha Foton Fengjing Bus Co., Ltd is not within the
scope of this reorganization.
(b) Registered Capital
Hunan Hunan Tongxin Moulding Manufacturing Co., Ltd. 10,000,000 RMB
Zhucheng Hunan Tongxin Autobody Co. Ltd. 5,000,000 RMB
Hunan Tongxin Ziyang Autobody Co., Ltd. 21,000,000 RMB
Changsha Futian Fengjing Bus Ltd. 10,000,000 RMB
(c) Hunan Tongxin Subsidiaries Organization
Hunan Hunan Tongxin Moulding Company
Register address: Changsha Jiangbei Zhuqiao Village
Legal representative: Xxx Xxxx
Establish date: July 27, 2005
Business term: July 26, 2025
Zhucheng Hunan Tongxin Vehicle Body Ltd.
Register address: LongDu Industrial Garden
Legal representative: Zhang Duanxiang
Establish date: Jan. 19, 2007
Business term: Jan. 19, 2007-Jan. 18, 2017
Hunan Tongxin Ziyang Co., Ltd.
Register address: Ziyang Waihuan Lu, Industrial Garden
Legal representative: Zhang Duanxiang
Establish date: March 24, 2003
Business term: March 12, 2003 - forever
Changsha Futian Fengjing Bus Co., Ltd.
Register address: Hunan Changsha Jiangbei Yangque Village
Legal representative: Zhang Xiyong
Establish date: July 16, 1999
Business term: July 16, 1999-July 15, 2019
After its establishment, Changsha Foton Fengjing Bus Co., Ltd has never
undergone any annual examinations.
3.04 Re-organization
No exception
3.05 Authorization and legal person conduct
No exception
3.06 There is no visible debt that has not been disclosed:
Hunan Hunan Tongxin Enterprise Company has the following major undue
debts:
Xxx.Xx Form of
Loan Contract No. Creditor 10,000RMB Loan Term Guarantee
----------------- ------------ --------- ----------- -----------
(430103101)2006 Agriculture 750 2006.9.30- The maximum
No. 0011 Bank 2007.9.30 Amt.
Changsha mortgage
Branch
43101200600003024 Agriculture 1000 2006.11.27- The maximum
Bank 2007.11.27 Amt.
Changsha mortgage
Branch
512007125001000 Changsha 1300 2007.2.16- Mortgage
Commercial 2007.12.16
Bank Sifang
Branch
00000000000000000 Agriculture 2250 2007.4.27- Mortgage
Bank 2008.4.26
Changsha
Branch
43101200700000950 Agriculture 1000 2007.5.24- Mortgage
Bank 2008.5.23
Changsha
Branch
(2007)(0525) Changsha 1000 2007.5.25- Mortgage
No.1 Jiangbei 2008.5.25
Village
Credit Union
(2006)No.22501 Changsha 1000 2006.12.25- Mortgage
Jiangbei 2008.6.25
Village
Credit Union
(2006) No.(_____) Changsha 1000 2007.1.5- Mortgage
Jiangbei 2008.6.25
Village
Credit Union
43101200700002572 Agriculture 1600 2007.6.29- Mortgage
Bank 2008.6.28
Changsha
Branch
Ziyang Automobile Company has Major undue Debts:
Xxx.Xx Form of
Loan Contract No. Creditor 10,000RMB Loan Term Guarantee
----------------- ------------ --------- ----------- -----------
51101200600010719 Agriculture 800 2006.11.29- Mortgage
Bank Ziyang 2007.11.29
Branch
51101200600007815 Agriculture 1500 2006.8.28- Mortgage
Bank Ziyang 2007.8.27
Branch
3.07 Real Property
(1) Land
Hunan Hunan Tongxin Enterprise Company has the land using right as following:
Land in Use Termination Mortgaged
Land use certificate No. (square meter) Date or Not
------------------------ -------------- ----------- ---------
Xxxxx Xxx Xxxx(2002)No. 007 15208.2 2052.1.9 Yes
Xxxxx Xxx Yong(2004)No. 345 19200 2054.7.1 Yes
Xxxxx Xxx Xxxx(2005)No. 266 75557.5 2052.1.8 Yes
Xxxxx Xxx Yong(2005)No. 267 83180 2052.1.8 Yes
Ziyang Automobile Company
Land in Use Termination Mortgaged Mortgage
Land use certificate No. (square meter) Date or Not Period
------------------------ -------------- ----------- --------- ----------
Ziyang Xxx Xxxx
(2004)No.BA220311 69999.0 2054.1.9 Yes 2005.8.28-
2007.8.29
(2) Building
Hunan Hunan Tongxin Enterprise Company owns the following land use rights:
Land in Use Mortgaged
Land use certificate No. (Square meter) or Not Mortgage Period
------------------------ -------------- --------- ---------------------
00003455 42.43 Write off N/A
00003456 302.21 Yes 2005.11.22-2008.11.22
00003457 384.30 Yes 2005.11.22-2008.11.22
00003458 384.82 Yes 2005.11.22-2008.11.22
00003459 704.29 Yes 2005.11.22-2008.11.22
00003460 81.65 Write off N/A
00003461 93.85 Write off N/A
00003462 91.87 Write off N/A
00003463 912.42 Yes 2005.11.22-2008.11.22
00003464 1188.90 Yes 2005.11.22-2008.11.22
00003465 248.94 Yes 2005.11.22-2008.11.22
00003466 748.35 Yes 2005.11.22-2008.11.22
00003467 1437.96 Yes 2005.11.22-2008.11.22
00003468 1539.30 Yes 2005.11.22-2008.11.22
00003469 1423.86 Yes 2005.11.22-2008.11.22
00003470 1423.86 Yes 2005.11.22-2008.11.22
00003471 560.34 Yes 2005.11.22-2008.11.22
00003472 1234.79 Yes 2005.11.22-2008.11.22
00003473 1109.96 Yes 2005.11.22-2008.11.22
00003474 794.22 Yes 2005.11.22-2008.11.22
00003477 1219.26 Yes 2005.11.22-2008.11.22
00003478 120.76 Yes 2005.11.22-2008.11.22
00003479 771.96 Yes 2005.11.22-2008.11.22
00003480 678.49 Yes 2005.11.22-2008.11.22
00003481 835.45 Yes 2005.11.22-2008.11.22
00003482 1964.31 Yes 2005.11.22-2008.11.22
00003483 487.64 Yes 2005.11.22-2008.11.22
00003484 808.19 Yes 2005.11.22-2008.11.22
00003485 1267.83 Yes 2005.11.22-2008.11.22
00003486 181.28 Yes 2005.11.22-2008.11.22
00003487 69.59 Yes N/A
00003488 396.17 Yes 2005.11.22-2008.11.22
00003489 1501.08 Yes 2005.11.22-2008.11.22
00003490 2452.92 Yes 2005.11.22-2008.11.22
00003491 334.08 Yes 2005.11.22-2008.11.22
00003492 74.48 Write off N/A
00003493 36.59 Write off N/A
00003494 3037.87 Yes 2005.11.22-2008.11.22
00003504 117.09 Write off N/A
00003505 3133.67 Yes 2005.11.22-2008.11.22
00003508 128.44 Yes 2005.11.22-2008.11.22
00008061 716.51 Yes 2005.11.22-2008.11.22
00008062 2345.36 Yes 2005.11.22-2008.11.22
00008063 2602.77 Yes 2005.11.22-2008.11.22
00008064 917.86 Yes 2005.12.23-2007.12.23
00008065 153.78 Yes 2005.12.23-2007.12.23
00008066 4878.40 Yes 2005.12.23-2007.12.23
00024025 4718.70 Yes 2005.11.22-2008.11.22
00024026 516.06 Yes 2005.11.22-2008.11.22
00024027 142.06 Yes 2005.11.22-2008.11.22
00024028 78.05 No N/A
00024029 92.62 No N/A
00024030 125.34 Yes 2005.11.22-2008.11.22
00024031 40.41 No N/A
00024038 2243.16 Yes 2005.11.29-2008.11.29
00024039 546.00 Yes 2005.11.29-2008.11.29
00024040 4747.78 Yes 2005.11.29-2008.11.29
00024041 102.30 Yes 2005.11.29-2008.11.29
00003495 5227.02 Yes 2005.12.23-2007.12.23
00003496 1833.04 Yes 2005.12.23-2007.12.23
00003497 2528.69 Yes 2005.12.23-2007.12.23
00003498 553.74 Yes 2005.12.23-2007.12.23
00003499 492.54 Yes 2005.12.23-2007.12.23
00003500 4598.40 Yes 2005.12.23-2007.12.23
00003501 50.27 Write off N/A
00003502 161.66 Yes 2005.12.23-2007.12.23
00003503 1589.99 Yes 2005.12.23-2007.12.23
00003507 9653.86 Yes 2005.12.23-2007.12.23
00024021 28.77 No N/A
00024022 13831.70 Yes 2005.12.23-2007.12.23
00024023 1832.26 Yes 2005.12.23-2007.12.23
00024024 75557.50 No N/A
00003445 1013.08 Yes 2005.12.13-2007.12.23
00003446 1556.29 Yes 2005.12.23-2007.12.23
00003447 101.34 Yes 2005.12.23-2007.12.23
00003448 907.47 Yes 2005.12.23-2007.12.23
00003499 512.83 Yes 2005.12.23-2007.12.23
00003450 276.47 Yes 2005.12.23-2007.12.23
00003452 58.02 Yes 2005.12.23-2007.12.23
00003453 951.39 Yes 2005.12.23-2007.12.23
00003454 1172.68 Yes 2005.12.23-2007.12.23
00003475 64.52 Yes 2005.12.23-2007.12.23
00003476 1333.51 Yes 2005.12.23-2007.12.23
Ziyang Automobile Company Building:
Land in Use Mortgaged
Land Use Certificate No. (square meter) or not Mortgage Period
------------------------ -------------- --------- ---------------------
2006-034404 11024.97 No N/A
2006-034405 2238.24 No N/A
2006-034406 7076.81 No N/A
Zhucheng Hunan Tongxin Autobody Co., Ltd. owns the using right of following
leasing building:
As stipulated in the contract entered by and between Zhucheng TX Autobody Co.,
Ltd and Zhucheng Renhe Hardwares Co., Ltd on September 8, 2006, Zhucheng TX
Autobody Co., Ltd leases the houses in Xxxxxx Xxxxxxxxxx Xxxx, Xxxxxxxx Xxxx
with a lease term of 5 years from October 10, 2006 to October 9, 2011 at an
annual rent of RMB 300,000 yuan
3.08 Intellectual Property
(1) Pantent
Hunan Hunan Tongxin Enterprise has the following patent on exterior design:
Patent Title Patent No.
-------------------- ----------------
Heavy Duty Truck Cab ZL02320670.5
Cab(I) ZL200330106217.3
Cab(II) ZL200330106218.8
Cab(Meihua1021) ZL200530049012.5
(2) Register Trademark
Hunan Hunan Tongxin Enterprise Company has the following register land xxxx
Trademark
Registration No. Expiration Date
---------------- ----------------------
No.1757292 2002. 4. 28-2012. 4.27
No. 3000104 2003.1.21-2013.1.20
No. 834535 1996.4.28-2006.4.27
Effective period is extended from
2006.4.28-2016.4.27
3.09 Title and Condition to Assets
No exception
3.11 Compliance with Law
Hunan Tongxin and it's subsidiaries have not paid social insurance fees for
their employees other than their shareholders. According to a reply made by the
Labor and Social Security Bureau of Changsha County of Hunan Province on May 10,
2006, Hunan Tongxin and Hunan Hunan Tongxin Moulding Company may improve their
social insurance systems gradually.
3.12 Disclosure
No exception
SCHEDULE E MEMORANDUM OF REORGANIZATION
Prior to the reorganization of TX, TX's ownership structure is as follows:
- TX and TX shareholders jointly own:
- Hunan TX Ziyang Auto Body Co Ltd.
- Hunan TX Mould Manufacturing Co Ltd.
- TX shareholders as a group own
- Zhucheng TX Autobody Co. Ltd.
Upon the reorganization TX and issuance of new business licenses for each of the
three subsidiaries the TX ownership structure will be as follows:
- TX 100% wholly owned subsidiaries
- Hunan TX Ziyang Auto Body Co Ltd.
- Hunan TX Mould Manufacturing Co Ltd.
- Zhucheng TX Autobody Co. Ltd.
SCHEDULE F FORM OF MANAGEMENT EMPLOYMENT AGREEMENT
Hunan TX Enterprise Co., Ltd
Management Employment Agreement
This agreement is entered into by and between the following parties on [Month]
[Day], [Year]:
Party A: Hunan TX Enterprise Co., Ltd (the "Company")
Party B: ____________ (the "Manager")
ID No.: __________________________
To clarify each party's rights, interests and obligations,
the two parties, after friendly negotiation, agree as follows:
1. Definitions and Explanations
1.1 Definitions
Except as otherwise defined, the following words shall have the following
meanings in this agreement:
"Manager" shall mean General Manager, vice General Manager, Financial Manager
and mangers of each department engaged by the Company in accordance with this
agreement, and the actual position is detailed in Section 2.1 of this agreement.
"The Articles of Association" shall mean the current Articles of Association of
the Company, including its legally amended and effective articles.
"China" shall mean the People's Republic of China, but excluding Hong Kong
Special Administrative Region, Macau Special Administrative Region, and Taiwan
region.
"Company Law" shall mean the Company Law of the People's Republic of China,
approved by National People's Congress on October 27, 2005 and effective on
January 1, 2006.
"Subsidiary" shall mean any other company controlled by the Company currently
and/or in future.
1.2 Explanations
Except as otherwise stipulated in this agreement,
1.2.1 Article or item means an article or item agreed upon and stipulated by
both parties;
1.2.2 Law includes but is not limited to current and effective Laws, codes,
effective modifications, supplements or amendments to the above Laws or codes
made by appropriate authorities after signing of this agreement;
1.2.3 No article or item in this agreement prohibits extension, modification,
amendment of or supplement to this agreement, if such act has been approved by
both parties;
1.2.4 All headlines in this agreement are only for convenience of reference and
shall have no influence on the explanation of this agreement.
2. Term of Employment
2.1 Party A appoints Party B as the Company's ____ with a term of 2 years.
After this agreement terminates, Party B may be reappointed for another term
upon both parties's consent.
2.2 The term of 2 years starts from the signature date.
3. Responsibilities and Obligations
Manager exercises all powers and functions granted by the Company.
3.2 Manager promises to the Company that in this employment term he shall:
3.2.1 submit materials related to the Company's affairs to the Company's board
of directors upon its reasonable request.
3.2.2 sincerely and diligently devote him/her to performing the functions,
responsibilities and rights assigned or granted by the Company to the Manager;
3.2.3 abide by all regulations or byLaws of the Company applicable to
administrative officers and managers;
3.2.4 act with due care, diligence and skill of a reasonably careful individual
in similar circumstances, when exercising his/her powers or performing his/her
obligations.
3.3 When exercising powers or functions granted by Law or the Company, Manager
shall perform the following obligations in compliance with the principle of
fiduciary and due-diligence:
3.3.1 Manager shall exercise the above powers and functions personally and
independently, in compliance with the objectives of Law or the Company, and
unless otherwise permitted by Law or approved by board of directors, Manager
shall not transfer the Manager's powers or functions to other individual or act
in excess of his/her powers and functions;
3.3.2 Manager shall accept legal supervision on his performance of his powers or
obligations of and reasonable suggestion submitted by the Company's board of
directors or supervisors;
3.3.3 Manager shall abide by his/her obligations to shareholders as stipulated
in the Company's Articles of Association, and fairly and equally maintain the
interests of the Company and its shareholders;
3.3.4 Manager shall not seek interests for himself/herself or other individual
by utilizing private information;
3.3.5 Manager shall not accept bribes or other illegal interests, or encroach
upon the Company's assets by utilizing his powers or functions;
3.3.6 Manager shall not open accounts in his name or other individual to deposit
the Company's assets.
3.3.7 Manager shall not provide a guarantee in the Company's name for debts of a
shareholder of the company or other individual with the company's assets.
3.3.8 Unless approved by the Company's board of directors, Manager shall not
accept commission or kickback related to the Company's business.
3.4 Through his term of duty, Manager shall timely and fully inform (or inform
in written as required) the Company's board of directors of the Company's
business or affairs, and explain as required by board of directors.
4. Rewards
4.1 Party A abides by the rule of "distribution according to work". In
accordance with the Company's practical operation, regulations and rules, and
Party B's actual work and performance, Party A may determine Party B's salary
and bonus. After approved by the Company and agreed by Manager, both parties may
adjust the actual amount of rewards.
4.2 Party B's salary paid by Party A is before-tax salary, and Party B's
individual income tax shall be withheld and paid, on behalf Party B, by Party A.
4.3 During legal festivals and holidays, yearly holidays, holidays for marriage
or funeral, maternity leave, Party A shall pay salary to Party B as usual.
4.4 Besides the rewards above-mentioned in section 4.1, Manager shall have the
right to enjoy allowance and interests granted by the Company to other
employees.
5. Expenses
All reasonable expenses (including but not limited to tour expenses, board and
lodging expenses and other actual cost) incurred from Manager's exercise of his
powers or functions stipulated in this agreement shall be reimbursed by the
Company, and for such expenses, the Company may require Manager to provide
relative receipts and vouchers.
6. Confidential Information
6.1 Unless otherwise ordered by Law, approved by shareholders'
meeting or in other special circumstances, within or after his term of duty,
Manager shall not disclose or inform any individual (except that the Company's
senior management officers have the right to require related information, or
other individual required by Law); or use for his private or other reason other
than for the Company; or for omission or lack of investigation, so that the
Company's following confidential, secret or private information are disclosed:
6.1.1 the Company's exclusive information, technical data, business secrets or
know-how; including but without limitation to research and production plan,
services, users list and consumer relationship (including but without limitation
to consumer relationships developed and formed within the Manager's term of
duty); software development, invention, technical process, formula, technology,
design, drawing, engineering, hardware structure information, marketing,
financial information, and other information directly or indirectly received in
written, oral, illustration or other patterns by Manager, but exclusive of
public information or the information may be received legally from any third
party by normal methods (hereinafter abbreviated as confidential information);
6.1.2 confidential information used or kept by the Company or its any
subsidiary, or technical process developed or information invented in the
Manager's term of duty;
6.1.3 on condition that the Company having performed its obligation on
confidential information, the confidential information only for certain
intentions received from any third
party;
6.1.4 any invention, creation, know-how, works, drawing, plan and so on,
independently or jointly with others, achieved by the Manager consigned by the
Company and using the Company's resources in his term of duty.
6.2 The restrictions stipulated in section 6.1 are not applicable to the
information or data that is accessible to public without important labor,
technical or monetary cost, except for the information disclosed by the Manager
breaching his obligations.
6.3 Unless permitted by the Company in written, the Manager shall not engage in
any side occupation in his term of duty.
6.4 The Manager shall not copy any information, documents, data and other files
of the Company irrelevant to his work to his own computer. If needs of work, the
above-mentioned information, documents, data files shall be deleted from the
Manger's own computer after treatment of them.
7. Prohibition of Lobby
7.1 The Manager promises, within his employment in the Company or 36 months
after such employment, that he must not lobby or lure the following individuals
or entities to separate from the Company in China or other places where the
Company has business, for whatever reason:
7.1.1 Individuals, trade names, firms or other organizations,
which are the Company's consumers or have business with the Company on or within
12 months before the above expiration date, and have touch with or are known by
the Manager in his term of duty;
7.1.2 Individuals, trade names, firms or other organizations, with which the
Manager, on behalf of the Company, has a great deal of regular, successive
business;
7.1.3 The Company's employees, directors, managers or counselors and so on.
7.2 The Manager shall not employ or engage the Company's employees, counselors
or other individuals entering service contracts with the Company, or engage them
to provide same services.
8. Non-competition
8.1 Unless otherwise approved by Board of Directors, the Manager in his
employment by the Company, shall not directly or indirectly be engaged or
involve in any other enterprise's activities, or own any economic interests in
any other enterprise, if Board of Directors reasonably consider:
8.1.1 Such enterprise competes or has a trend to compete with the Company's
business;
8.1.2 It is disgraceful for the Company to have relation with such enterprise;
8.1.3 To be engaged by such enterprise will obstruct the Manager to fully and
normally perform his responsibilities or functions.
8.2 Unless approved by Board of Directors in advance, within 12 months after his
employment expires, the Manager shall not:
8.2.1 By himself or proxy, engage in any business with competition to the
Company's business;
8.2.2 In name of administrative officer, technician, counselor or any other
name, directly or indirectly be employed by or involved in rival enterprise that
directly competes with the business of the Company or its any subsidiary.
8.3 The Company's Manager must obey confidentiality agreement, and must not
involve in any activity conflicting or conflicting in suspicion with the
Company's interests. The above activity includes but without limitation to:
8.3.1 Damage the Company's interests on purpose for seeking his own interests,
or caused by material fault.
8.3.2 Accept or donate too expensive gifts, pay too much entertainment expense
and other activities that may result in bad effects and degrade the Company's
reputation;
8.3.3 Engage direct relative into the Company and conceal such relationship;
8.3.4 Without authorized, discuss the Company's price, cost,
consumer relationship, markets and other confidential information with any
enterprise or individual other than the Company;
8.3.5 Engage any activity that may result in the Company's legal rights damaged
or badly impacted;
8.3.6 Except for stipulated in the Company's articles of the association or
approved by Board of Directors, the Manager shall not enter into a contract or
make a transaction with the Company;
8.3.7 For his own or other individual operate a business similar to the Company
or engage in any activity conflicting with the Company's interests;
8.3.8 Can't taking advantage of his duty, occupy or accept business due to the
Company.
9. Document Rreturn
Whenever the Company needs or this agreement legally expires, the Manager shall
promptly return the Company's due equipments and information to the Company or
an individual assigned by the Company, which are made, possessed, retained or
controlled by the Manager in the Manager's term of duty, and include but without
limitation to records, data, notes, reports, suggestions, business letters,
specifications, quotation information, drawings and other information and
equipments. The Manager shall not have the right to retain any copy, duplicate,
or any other kind of backup of the above-mentioned
information or equipments, and all ownerships and intellectual properties of the
above-mentioned items shall be reserved by the Company.
10. Termination of this Agreement
10.1 If one of the following circumstances occurs, the Company shall have the
right to terminate this agreement, but upon 30 days notice in written to the
Manager is necessary:
10.1.1 The Manager becomes disqualified or is prohibited to be a manager by Law,
or has involved the activities prohibited by section 9 in this agreement;
10.1.2 For illness, accident or any other reason, the Manager fails to perform
his responsibilities or functions stipulated in this agreement up to 6 months
successively or 120 working days totally.
10.2 The Company shall not dismiss the Manager without cause.
10.3 The Manager shall notify the Company in written and 1 month before his
resignation.
10.4 If the Manager, offending the provision in section 10.3, leaves his job and
results in the Company's loss, the Company shall have the right to claim to be
compensated by the Manager.
10.5 If this agreement is terminated for whatever reason, the force and effect
of section 7, 8, 9 shall not be prejudiced, and all these articles shall
survive.
11. Information
11.1 All notices sent in accordance with or related to this agreement shall be
in written.
11.2 Any above-mentioned shall send to the Company's current registered address,
or the Manager's working address or other proper address. On each of the
following condition, notice shall be deemed to be serviced formally:
11.2.1 If by courier service, notice has been delivered to the address of
related party;
11.2.2 If by mail, 3 days after mail has been sent;
11.2.3 If by fax, after fax has been sent.
12. Force
12.1 If any article of this agreement conflicts with the Articles of the
Association, the latter shall prevail, except for otherwise provided by Law.
12.2 For any matter not mentioned herein, both parties shall exercise their
powers and perform their obligations and responsibilities in accordance with the
requirements of Company Law, the Company's Articles of Association and other
Law.
12.3 When exercising his duties, the Manager offends Laws,
administrative regulations or the Company's Articles of Association, which
results in loss of the Company, the Manager shall have the obligation to
compensate for the Company legally.
13. Jurisdiction
13.1 Formation, effectiveness, performance, termination, explanation and
revision of this agreement shall be governed by China Laws.
13.2 Any dispute about performing this agreement shall be solved by both parties
by kindly negotiation, and if negotiation fails, any party shall have the right
to submit the dispute to labor dispute arbitration committee.
14. Supplementary Provisions
14.1 Any matter not mentioned herein shall be decided otherwise by both parties
by discussion.
14.2 After signed by both parties, this agreement shall be effective on the date
first above written.
14.3 This agreement has 2 counterparts, and each party holds 1 counterpart.
Hunan TX Enterprise Co., Ltd
(Stamp)
Legal representative (or authorized representative)
(Signature)
(Year) (Month) (Day)
Manager
Signature:
(Year) (Month) (Day)
SCHEDULE G LABOR CONTRACT
Hunan TX Enterprise Co., Ltd
Labor Contract
This Labor Contract is signed by and between the following two parties:
Party A: Hunan TX Enterprise Co., Ltd (hereinafter abbreviated as the"Company")
Party B: Name: __________________________ Gender: _____ Birth date: ____________
ID No.: ___________________
In accordance with related provisions of Labor Law of the People's Republic of
China ("PRC") and other relevant PRC laws and regulations, both parties, on the
basis of equality and voluntary will, agree as follows:
Article 1 Employment
1. Party B is engaged voluntarily by Party A as a ______.
2. Party B promises that he has no labor relationship with any other
enterprise when he signs this contract.
Article 2 Employment period
1. The period of Party A employing Party B is from [Month] [Day], [Year] to
[Month] [Day], [Year].
2. If both parties negotiate to reach an agreement, this contract may be
renewed upon employment period's expiration, shortened, or terminated ahead
of its expiration.
Article 3 Rewards
1. Party A applies the principle of"distribution according to work". In
accordance with the Company's practical operation, regulations and rules,
and Party B's actual work and performance, Party A may determine Party B's
salary and bonus. Party B's salary shall not be lower than the lowest
salary standard stipulated by Changsha City.
2. Party B's salary paid by Party A is before tax, and the individual income
tax for Party B shall be deducted and paid by Party A.
3. Within legal festivals and holidays, yearly holidays, holidays for marriage
or funeral, maternity leave, Party A shall pay salary to Party B as usual.
Article 4 Labor Conditions and Protection
1. According to Party A's arrangement, Party B shall exercise timing work
system. Party B's working time is 8 hours daily, 5 working days a week.
Practical working time shall be executed in accordance with Party A's
provisions.
2. Party A shall provide a safety and sanitary working environment, and in
accordance with national regulations provide labor protection necessities
and health care products to Party B if needed by work.
3. In accordance with national regulations, Party A shall offer special labor
protection to female employee during her menstrual, pregnant, puerperal,
breast-feeding period.
Article 5 Work Discipline
1. Party A is responsible to train Party B about ideology education,
professional ethics, vocational techniques, labor safety, legal propaganda
and the Company's culture..
2. Party B shall abide by all provisions of national laws, all regulations and
rules legally stipulated by Party A. If Party B violates work discipline,
Party A, in accordance with its regulations and rules, may give Party B
necessary disciplinary punishment until dismissing Party B and terminating
this contract.
3. Party B shall work daily in accordance with the Company's requirements,
timely accomplish his work with reasonable amount and quality standard as
provided
4. For employees' confidential matters, confidentiality agreement shall be
entered otherwise.
Article 6 Insurance and Welfare
1. Party A shall pay all social insurance premiums for Party B in accordance
with national regulations and Party B's due payment may be deducted and
paid by Party A from Party B's salary.
2. Party A will not pay any social insurance premium for Party B after this
labor contract is terminated or expired.
3. If Party B has any work-related disease, injures suffered at work or not at
work, his salary and medical insurance shall be treated in accordance with
the national related regulations.
4. Party B legally enjoys the national statutory paid rest, holiday, holidays
for marriage or funeral, maternity leave, and the detailed information sees
Party A's related regulations.
Article 7 Contract Revision
1. If one of the following circumstances occurs, both parties may revise the
labor contract:
(1) Both parties negotiate to reach an agreement.
(2) Laws or regulations as bases of this labor contract have been modified.
(3) Party A's operational conditions and economic situation have been
significantly changed, and Party A fails to continuously perform this labor
contract.
(4) Other situations stipulated by law.
2. Either party, which wants to revise the labor contract, shall notify the
other party by writing 30 days in advance, and all procedures related to
the revision of the labor contract shall be followed by writing.
Article 8 Termination of the Labor Contract
1. This labor contract may be terminated at any time upon agreement of the two
parties.
2. On each of the following conditions, Party A may terminate this labor
contract at any time:
(1) Party A finds that Party B has not terminated the labor contract with his
former employer, or has other employment relationship with other party
without approval of Party A;
(2) Party B does not perform his responsibilities or functions without any
reasonable cause, and still fails to correct after Party A's criticism,
education or punishment;
(3) Party B seriously violates work disciplines or regulations and rules
legally stipulated by Party A;
(4) Party B causes great losses to Party B due to serious dereliction of duty;
(5) Party B violates national laws or regulations, and has been labor-educated
or investigated for criminal responsibility in accordance with the law.
3. On each of the following conditions, Party A may terminate this labor
contract, but shall notify Party B by writing 30 days in advance:
(1) After recovering from work-related illness or injure, Party B fails to do
the former work or other work otherwise arranged by Party A;
(2) Party B is not competent to his work;
(3) Objective situation is changed greatly, on which this labor contract is
signed, so that this labor contract is impossible to be performed, and
fails to be changed through both Parties' discussion.
(4) On other condition as stipulated by related national laws or regulations,
this labor contract may be terminated.
4. On each of the following conditions, Party A must not terminate this labor
contract in accordance with the above provision:
(1) Party B has occupational disease or has been injured at work, and has lost
all or partial labor ability as confirmed
by labor appraisal committee;
(2) Party B is receiving medical treatment for disease or injures within the
prescribed period of time;
(3) Female employee is in maternity, pregnancy or lactation;
(4) On other condition as stipulated by related national laws or regulations,
this labor contract must not be terminated.
5. On each of the following conditions, Party B may terminate this labor
contract at any time:
(1) Party A fails to pay labor rewards or offer labor conditions as stipulated
in this labor contract;
(2) As confirmed by related authorities of the state, work conditions and
environments offered by Party A are bad and greatly harm Party B's body
safety and physical and mental health;
(3) Party A, by violence, threat, or illegally restricting personal liberty,
forces Party B to labor.
6. On each of the following conditions, Party B may terminate this labor
contract, however, shall notify Party A by writing 30 days ahead of time:
(1) Party B engages in advanced study without working after approved by Party
A;
(2) Party B wants to resign in accordance with the national regulations; or
(3) Other situations approved by Party A.
7. Except for upon the above item 5 or item 6, Party B shall not terminate
this contract on each of the following conditions:
(1) The term of this labor contract does not expires;
(2) Party B has not fulfill economic compensation, economic punishment, or
administrational or disciplinary punishment;
(3) Other situations stipulated by national laws or regulations.
Article 9 Liabilities of Breach
1. If Party A violates the stipulations of this contract, so that this
contract is terminated and Party B is damaged, Party B's losses shall be
compensated by Party A.
2. If Party B violates the stipulations of this contract, so that this
contract is terminated and Party A is damaged, Party B shall be responsible
for the compensation legally.
Article 10 Force and Other Matters
1. For any matter not mentioned herein, both parties may make supplementary
provision after discussion. Supplementary
provisions shall have legal effect equal to this contract.
2. This contract becomes effective upon signatures or seals of both parties.
3. This contract has 2 counterparts with equal legal effect, and each party
holds one counterpart.
Party A: Hunan TX Enterprise Co., Ltd
(Stamp)(Signature)
Legal representative
(or authorized representative):
(Signature)
(Year) (Month) (Day)
Party B: _________________________
(Year) (Month) (Day)
SCHEDULE H CORPORATE GOVERNANCE RULES
AMENDMENT NUMBER 1
Whereas, ASIA AUTOMOTIVE ACQUISITION CORPORATION, HUNAN TX ENTERPRISE CO., LTD.,
and all the Shareholders of HUNAN TX ENTERPRISE CO., LTD. have entered into an
Equity Acquisition Agreement as of July 24, 2007. After friendly negotiation,
all Parities hereby agree to amend the Equity Acquisition Agreement on October
29, 2007, as follows:
In respect of Section 9.01(b) of the Equity Acquisition Agreement, the date
"November 15, 2007" should be extended to "4:00 pm New York time, February 6,
2008".
Except as specifically amended hereby, the provisions of the Equity Acquisition
Agreement shall continue in full force and effect and be binding on each Party
in accordance with its terms.
ASIA AUTOMOTIVE ACQUISITION CORPORATION
Authorized Representative: Authorized Representative
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxx Xxxxxx
------------------------------ ----------------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxx Xxxxxx
Title: Title:
----------------------- ---------------------------------
HUNAN TX ENTERPRISE CO., LTD.
(SEAL)
Legal Representative: /s/ Duanxiang Zhang
-------------------------
Name: Duanxiang Zhang
SHAREHOLDERS OF HUNAN TX ENTERPRISE CO., LTD.
Authorized Representative: /s/ Xxxxx Xxxx
--------------------
AMENDMENT TO EQUITY ACQUISITION AGREEMENT (NO.2)
Whereas, ASIA AUTOMOTIVE ACQUISITION CORPORATION, HUNAN TX ENTERPRISE CO., LTD.,
and all the Shareholders of HUNAN TX ENTERPRISE CO., LTD. have entered into an
Equity Acquisition Agreement as of July 24, 2007. After friendly negotiation,
all Parities hereby agree to amend the Equity Acquisition Agreement on February
4, 2008, as follows:
In respect of Section 9.01(b) of the Equity Acquisition Agreement, the date
"4:00 pm, New York time, February 6, 2008" should be extended to "4:00 pm, New
York time, February 29, 2008".
Except as specifically amended hereby, the provisions of the Equity Acquisition
Agreement shall continue in full force and effect and be binding on each Party
in accordance with its terms.
ASIA AUTOMOTIVE ACQUISITION CORPORATION
Authorized Representative: Authorized Representative:
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxx Xxxxxx
--------------------------- -----------------------------------------
Name: Name:
Title: Title:
--------------------- -----------------------------------
HUNAN TX ENTERPRISE CO., LTD.
(Seal)
Legal Representative:
-------------------------
Name: Duanxiang Zhang
SHAREHOLDERS OF HUNAN TX ENTERPRISE CO., LTD.
Authorized Representative:
-----------------------
Name: Duanxiang Zhang
AMENDMENT TO EQUITY ACQUISITION AGREEMENT (NO.3)
Whereas, ASIA AUTOMOTIVE ACQUISITION CORPORATION, HUNAN TX ENTERPRISE CO., LTD.,
and all the Shareholders of HUNAN TX ENTERPRISE CO., LTD. have entered into an
Equity Acquisition Agreement as of July 24, 2007. After friendly negotiation,
all Parities hereby agree to amend the Equity Acquisition Agreement on February
5, 2008, as follows:
In respect of Section 8.03 of the Equity Acquisition Agreement, the following is
added:
(d) Tongxin International will have acquired ownership or control of Hunan
Tongxin
Except as specifically amended hereby, the provisions of the Equity Acquisition
Agreement shall continue in full force and effect and be binding on each Party
in accordance with its terms.
ASIA AUTOMOTIVE ACQUISITION CORPORATION
Authorized Representative: Authorized Representative:
/s/ Xxxxxxx X. Xxxxxx /s/ Xxxx Xxxxxx
--------------------------- -----------------------------------------
Name: Name:
Title: Title:
--------------------- -----------------------------------
HUNAN TX ENTERPRISE CO., LTD.
(Seal)
Legal Representative:
-------------------------
Name: Duanxiang Zhang
SHAREHOLDERS OF HUNAN TX ENTERPRISE CO., LTD.
Authorized Representative:
-----------------------
Name: Duanxiang Zhang
AMENDMENT TO EQUITY ACQUISITION AGREEMENT (NO. 4)
Whereas, ASIA AUTOMOTIVE ACQUISITION CORPORATION, HUNAN TX ENTERPRISE CO., LTD.,
and all the Shareholders of HUNAN TX ENTERPRISE CO., LTD. have entered into an
Equity Acquisition Agreement as of July 24, 2007. After friendly negotiation,
all Parities hereby agree to amend the Equity Acquisition Agreement on February
29, 2008, as follows:
In respect of Section 9.01(b) of the Equity Acquisition Agreement, the date
"4:00 pm, New York time, February 29, 2008" should be extended to "4:00 pm, New
York time, April 30, 2008".
Except as specifically amended hereby, the provisions of the Equity Acquisition
Agreement shall continue in full force and effect and be binding on each Party
in accordance with its terms.
ASIA AUTOMOTIVE ACQUISITION CORPORATION
Authorized Representative:
/s/ XXXX XXXXXX
---------------------------------------
Title: Chief Executive Officer,
Name: Xxxx Xxxxxx
HUNAN TX ENTERPRISE CO., LTD.
(SEAL)
Legal Representative:
/s/ DUANXIANG ZHANG
---------------------------------------
Name: Duanxiang Zhang
SHAREHOLDERS OF
HUNAN TX ENTERPRISE CO., LTD.
Authorized Representative:
/s/ DUANXIANG ZHANG
---------------------------------------
Name: Duanxiang Zhang
