EXHIBIT 10 (xxviii)
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ASSET PURCHASE AGREEMENT
BY AND AMONG
SHANDONG CHENGSHAN TIRE COMPANY LIMITED BY SHARES
AND
COOPER CHENGSHAN (SHANDONG) PASSENGER TIRE COMPANY LTD.
AND
CHENGSHAN GROUP COMPANY LIMITED
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Dated as of October 27, 2005
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND INTERPRETATIONS.................................2
ARTICLE 2 SALE AND PURCHASE OF PURCHASED ASSETS...........................2
ARTICLE 3 PURCHASE PRICE..................................................5
ARTICLE 4 ASSIGNMENT OF CONTRACTS AND RIGHTS..............................5
ARTICLE 5 CONDITIONS......................................................6
ARTICLE 6 ACTION PENDING CLOSING..........................................8
ARTICLE 7 CLOSING........................................................11
ARTICLE 8 NOTICE OF SALE OF THE PURCHASED ASSETS.........................13
ARTICLE 9 WARRANTIES.....................................................13
ARTICLE 10 INDEMNIFICATION................................................26
ARTICLE 11 GUARANTEE AND INDEMNITY BY GUARANTOR...........................28
ARTICLE 12 FORCE MAJEURE..................................................29
ARTICLE 13 CONFIDENTIALITY................................................29
ARTICLE 14 GOVERNING LAW..................................................30
ARTICLE 15 DISPUTE RESOLUTION.............................................30
ARTICLE 16 MISCELLANEOUS PROVISIONS.......................................31
SCHEDULE 1 DEFINITIONS AND INTERPRETATION...................................34
This ASSET PURCHASE AGREEMENT (this "AGREEMENT") is made and entered into in the
People's Republic of China ("CHINA" or "PRC") on this 27th day of October, 2005,
in accordance with the PRC Tentative Regulations Regarding Merger with and
Acquisition of Domestic Enterprises by Foreign Investors (the "M&A REGULATIONS")
and other applicable PRC laws and regulations, pursuant to the principles of
equality and mutual benefit, by and among:
SELLER: SHANDONG CHENGSHAN TIRE COMPANY LIMITED BY SHARES, a company limited
by shares registered and incorporated under the laws of the PRC,
with its registered address at No. 98, Nanshan Road North, Rongcheng
City, Shandong Province, PRC;
PURCHASER: COOPER CHENGSHAN (SHANDONG) PASSENGER TIRE COMPANY LTD., a
Sino-foreign limited liability company registered and incorporated
under the laws of the PRC, with its registered address at No. 99,
Qingshan Road West, Rongcheng City, Shandong Province, PRC; and
GUARANTOR: CHENGSHAN GROUP COMPANY LIMITED, a limited liability company
registered and incorporated under the laws of the PRC, with its
registered address at No. 98, Nanshan Road North, Rongcheng City,
Shandong Province, PRC.
(Each of Seller, Purchaser and Guarantor is hereinafter individually referred to
as a "PARTY" and collectively as the "PARTIES".)
RECITALS:
(A) Seller is the lawful owner of the Purchased Assets as set out in this
Agreement and lawful party to the Contracts in connection with the HSR
Business of Seller.
(B) In accordance with a Sino-foreign equity joint venture contract executed
on the date as of October 27, 2005 among the Seller and Cooper Tire
Investment Holding (Barbados) Ltd. and Joy Thrive Investments Limited ("JV
CONTRACT"), Seller has agreed to contribute the Owned Properties as set
out in this Agreement to the Purchaser as its capital contribution, in
exchange for a thirty five percent (35%) equity interest in the Purchaser.
(C) In accordance with the JV Contract, the Seller agrees to sell the
Purchased Assets (other than the Owned Properties contributed to the
Purchaser in accordance with the JV Contract) to the Purchaser upon the
duly establishment of the Purchaser.
(D) In accordance with the terms and conditions of this Agreement, the
Purchaser wishes to purchase and the Seller wishes to sell and transfer
the Purchased Assets and Contracts, with the Purchaser's assumption of the
Assumed Liabilities as at the Closing Date as specified herein, so as to
accomplish the goal of transferring the HSR Business of Seller to
Purchaser for continuous operation (hereinafter "TRANSACTION").
(E) The Guarantor, which owns 73.76% equity interests of the Seller, agrees to
provide a joint and several guarantee for all of the obligations of the
Seller under this Agreement.
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THE PARTIES HEREBY AGREE AS FOLLOWS:
ARTICLE 1 DEFINITIONS AND INTERPRETATIONS
1.1 Unless the terms or context of this Agreement provide otherwise,
capitalized terms used herein without definition have the meanings
assigned to them in Schedule 1 as attached to this Agreement.
1.2 In this Agreement, save where the context otherwise requires:
1.2.1 words in the singular shall include the plural, and vice
versa;
1.2.2 a reference to a person shall include a reference to a firm, a
body corporate, an unincorporated association or to a person's
executors or administrators;
1.2.3 a reference to an Article, sub-article, Schedule and Exhibit
shall be a reference to an Article, sub-article, Schedule and
Exhibit (as the case may be) of or to this Agreement;
1.2.4 if a period of time is specified and commences from a given
day or the day of an act or event, it shall be calculated
inclusive of that day;
1.2.5 references to writing shall include any modes of reproducing
words in a legible and non-transitory form;
1.2.6 a reference to a balance sheet or profit and loss account
shall include a reference to any note forming part of it;
1.2.7 the obligations and liabilities of the Seller and Guarantor
hereunder are the joint and severally obligations and
liabilities of the Seller and Guarantor;
1.2.8 references to this Agreement include this Agreement as amended
or supplemented in accordance with its terms.
1.3 The designations adopted in the recitals and introductory statements
preceding this Article apply throughout this Agreement and the Schedules.
ARTICLE 2 SALE AND PURCHASE OF PURCHASED ASSETS
2.1 The Purchaser, relying on the agreements, covenants, representations,
warranties, undertakings and indemnities of the Seller herein, hereby
agrees to purchase from the Seller and the Seller as legal and/or
beneficial owner hereby agree to sell to the Purchaser on the Closing Date
free and clear of all Encumbrances, assets, properties and rights related
to the HSR Business of every kind and description, wherever located, real,
personal or mixed, owned, held or used in the conduct of the HSR Business
by Seller as the same shall exist at the Closing Date, including those
assets of the HSR Business shown on the Management Accounts and not
disposed of in the ordinary course of business (but excluding the Owned
Properties) and those assets of the HSR Business thereafter acquired by
the Seller (the "PURCHASED ASSETS"), and including, subject to the
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limitations in Article 2.4, all rights, title, benefits and interests of
the Seller in, to and under such of the foregoing as are more specifically
described below:-
2.1.1 all customer accounts of the Seller relating to the HSR
Business, all customer mailing and prospect lists of the
Seller relating to the HSR Business, and all of the Seller's
rights to service the customer accounts of the HSR Business;
2.1.2 all the Properties relating to the HSR Business together with
all buildings, fixtures, and improvements erected thereon
(except for those Owned Properties injected by the Seller as
its capital contribution in accordance with the JV Contract);
2.1.3 all vehicle, machinery, equipment, furniture and computer
relating to the HSR Business (together with all the data
stored therein);
2.1.4 all claims, benefits, rights and entitlements under the
Lease(s), Insurances and all contracts, contract rights,
agreements, licenses, commitments, sales and purchase orders
and other instruments (whether uncompleted or pending)
relation to the HSR Business and the Purchased Assets, as
wholly and fully disclosed to the Purchaser by the Seller
(collectively, the "CONTRACTS") including all deposits or
progress payments received prior to the Closing Date in
respect of the same;
2.1.5 accounts, notes, receivables and other amounts owing to the
Seller by trade debtors in connection with the HSR Business in
respect of goods or services supplied by the Seller (whether
or not invoiced or which are only payable upon completion of
the outstanding work/stage of work under the Contracts at
Closing Date) and the benefit of all guarantees or other
security in respect thereof (collectively the "ACCOUNTS
RECEIVABLE");
2.1.6 prepaid expenses and deposits in connection with the HSR
Business, including, without limitation, ad valorem taxes,
leases and rentals;
2.1.7 Seller's rights, claims, credits, causes of action or rights
of set-off against third parties relating to the HSR Business
and the Purchased Assets, including, without limitation,
unliquidated rights under manufacturers' and Seller'
warranties;
2.1.8 claims and rights (if any) under all franchises, transferable
licenses, including, but not limited to, licenses, permits,
consents, authorizations, certificates and approvals of any
governmental agency or other governmental authorizations
affecting, or relating in any way to, the HSR Business;
2.1.9 all books, records, files and papers, whether in hard copy or
computer format, including, without limitation, sales and
promotional literature, manuals and data, sales and purchase
correspondence, lists of present and former suppliers, lists
of present and former customers, personnel and employment
records, and any information relating to taxes imposed on the
Purchased Assets;
2.1.10 other properties and assets owned by the Seller and used in
connection with the HSR Business at the Closing Date (wherever
located).
2.2 Required Consent
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2.2.1 Where the Seller is unable to transfer to the Purchaser a
Contract on the Closing Date because consent from the relevant
party to the Contract (other than the Seller) for such
transfer has not been obtained on or before that date, without
prejudice to Article 4.4 the Seller shall use its best
endeavors to obtain such consent and transfer the full benefit
and legal right under such Contract to the Purchaser within 90
days from the Closing Date.
2.2.2 The Purchaser shall use its best endeavors to assist the
Seller in obtaining the consent for the purpose of Article
2.2.1. Without prejudice to Article 4, the Purchaser may at
its absolute discretion waive any of the requirements under
Article 2.2.1.
2.3 Assumption of Liabilities
2.3.1 Without prejudice to the provisions in Article 2.3.2, the
Purchaser shall assume the transferable liabilities incurred
by the Seller in connection with the HSR Business and
identified by the Purchaser and stated on the balance sheet of
the Seller dated as of the Closing Date (the "ASSUMED
LIABILITIES").
2.3.2 Except as otherwise contained in Article 2.3.1 above or as
otherwise agreed by the Parties in writing, the Seller shall
remain liable for and the Purchaser shall not assume any other
liabilities incurred by the Seller in connection with the HSR
Business or the Purchased Assets and any other claims arising
from the operation of the HSR Business prior to the Closing
Date. The Seller shall promptly pay and discharge in full all
liabilities and claims referred to in this Article 2.3.2,
which may adversely impact the normal operation of the
Purchaser, to the extent practicable and as soon as
practicable after the Closing Date in all other cases, but in
no event later than sixty (60) days from the Closing Date.
2.4 Limitations
2.4.1 Those Owned Properties injected by the Seller as its capital
contribution in accordance with the JV Contract shall be
excluded from the Purchased Assets.
2.4.2 On or after the Closing Date, Seller will retain the ownership
of certain inventories sufficient to liquidate the duty and
value-added tax (VAT) exempt importations of raw materials
that shall be owned by Seller as of the Closing Date.
2.4.3 On or after the Closing Date, Seller shall retain the
ownership of the working capital assets and liabilities (the
"NET WORKING CAPITAL") to the extent that the net of the
retained assets less the retained liabilities (including those
specified in Article 2.4.2 above) will not exceed the net
change in Net Working Capital between December 31, 2004 and
the Closing Date.
2.4.4 The net of the Purchased Assets less the Assumed Liabilities
shall not result in the amount of the Purchaser's assumption
of debt that will cause the excess of the permitted total
investment of the Purchaser stated in the JV Contract.
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ARTICLE 3 PURCHASE PRICE
3.1 As consideration for the purchase of the Purchased Assets, in reliance
upon the representations and warranties, covenants, agreements and
undertakings of the Seller made herein, and subject to the terms and
conditions of this Agreement, the Purchaser shall pay to the Seller, the
sum equivalent to the excess of the Purchased Assets over the Assumed
Liabilities in United States Dollars (the "PURCHASE PRICE") (determined by
reference to the appraisal value of the Purchased Assets) within three (3)
months of the issuance of the Business License of the Purchaser.
3.2 If any liabilities, save to extent the Assumed Liabilities in Article 3.1,
cannot be transferred to the Purchaser due to any reason arising out of
legal proceedings or approval procedures, the Purchased Assets described
in Article 3.1 shall be reduced proportionately.
3.3 Without prejudice to any other remedies available to the Purchaser, in the
event that the Seller is in material breach of this Agreement or the JV
Contract ("DEFAULT") before the full amount of the Purchase Price has been
paid under this Article 3, at the discretion and request of the Purchaser,
the Seller shall forthwith cease to have any right to receive and the
Purchaser shall cease to have any further obligation to pay any remaining
balance of the Purchase Price to the Seller, and the Seller shall refund
the amount of the Purchase Price, which has been paid by the Purchaser
immediately preceding the occurrence of the Default, to the Purchaser
within five (5) days from demand by the Purchaser.
3.4 If the Purchaser fails to pay the Purchase Price within the period set
forth in Article 3.1 (the amount due and owing is referred to as the
"DEFAULT PAYMENT"), the Purchaser shall pay to the Seller a default
penalty of 0.05% per day based on the Default Payment from the first day
of the default until the day on which the Default Payment is fulfilled in
full by the Purchaser.
ARTICLE 4 ASSIGNMENT OF CONTRACTS AND RIGHTS
4.1 Seller agrees to assign or cause to be assigned to the Purchaser as of the
Closing Date, all of the rights of the Seller under the Contracts that are
assignable without license, consent, agreement, approval or waiver of any
third party or as to which consent has been obtained and, without
prejudice to Article 4.6, the Purchaser shall assume all obligations of
the Seller thereunder which will arise after the Closing Date.
4.2 This Agreement shall not constitute an agreement to assign any Purchased
Asset, Contract, or any claim, right or any benefit arising thereunder or
resulting therefrom if an attempted assignment thereof, without license,
consent, agreement, approval or waiver of a third party, would constitute
a breach or other contravention thereof or in any way adversely affect the
rights of the Purchaser thereunder and such consent cannot be obtained by
the Seller.
4.3 If any licenses, consents, agreements, approvals or waivers from third
parties are required for the transfer, assignment or novation to or in
favour of the Purchaser of any Contracts under this Agreement, the Seller
shall use its best efforts (but without requiring any payment of money by
the Purchaser) to obtain such licenses, consents, agreements,
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approvals or waivers from the other parties or claim any right or any
benefit arising thereunder for the assignment thereof to the Purchaser as
the Purchaser may request.
4.4 If such license, consent, agreement, approval or waiver is not obtained,
or if an attempted assignment thereof would be ineffective or would
adversely affect the rights of the Seller thereunder so that Purchaser
would not in fact receive or otherwise be entitled to the full benefit of
all such rights, the Seller (i) shall enter into such arrangement with the
Purchaser at the Purchaser's direction under which the Purchaser will
obtain the benefits and assume the obligations thereunder in accordance
with this Agreement, or under which the Seller would exercise for the
benefit of the Purchaser, with the Purchaser assuming Seller's
obligations, any and all rights of the Seller against a third party
thereto in accordance with the applicable PRC laws and regulations. The
Seller shall promptly pay to the Purchaser when received all monies
received by the Seller under any Purchased Asset, Contracts, or any claim,
right or any benefit arising thereunder; or (ii) shall exercise or cause
to be exercised, at the Purchaser's direction, any rights of the Seller
arising from such Contracts against the other party(ies) thereto,
including the right to elect to terminate any such Contracts in accordance
with the terms thereunder upon the request of the Purchaser.
4.5 The foregoing provisions do not affect Purchaser's rights and remedies
against the Seller in respect of a Contract which has been warranted to be
assignable, or may be performed by Purchaser instead of the Seller without
any novation or transfer agreement.
4.6 Except as otherwise expressly contained herein, nothing in this Agreement:
4.6.1 shall require the Purchaser to perform any obligation falling
due for performance or which should have been performed before
the Closing Date;
4.6.2 shall make the Purchaser liable for any act, neglect, default
or omission in respect of any Contracts or for any claim,
expense, loss or damage arising from any failure to obtain the
consent or agreement of any third party to the entry into of
this Agreement or from any breach of any of the Contracts
caused by this Agreement or its Closing; or
4.6.3 shall impose any obligation on the Purchaser for or in respect
of any goods supplied by the Seller or any service performed
by the Seller.
4.7 The Seller shall indemnify the Purchaser against all actions, proceedings,
costs, damages, claims and demands in respect of:
4.7.1 any act or omission on the part of the Seller in relation to
the Contracts; or
4.7.2 any alleged fault, defect or error of any kind arising from
goods supplied, services provided by the Seller or otherwise
arising from the operation of the HSR Business prior to the
Closing Date.
ARTICLE 5 CONDITIONS
5.1 Conditions Precedent
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Closing is conditional upon satisfaction of the following conditions prior
to the Closing Date:
5.1.1 Seller's completion of the capital contribution in accordance
with the JV Contract, with the contribution having been
verified by a PRC registered accountant;
5.1.2 the completion of satisfactory (in Purchaser' sole and
discretionary judgment) legal, commercial, human resources,
taxation and financial due diligence on the Seller;
5.1.3 the completion of any formal internal corporate approvals as
may be required by the Purchaser including approval by the
board of directors of each of the Purchaser, Seller and
Guarantor and approval by the shareholders assembly of Seller;
5.1.4 Seller's publication of the notice and announcement of
transfer relating to the sale of the Purchased Assets within
not more than 10 days from the date on which the Seller's
board of directors and/or shareholders assembly have approved
the sale of the Purchased Assets in compliance with the
provisions of the M&A Regulations;
5.1.5 any and all Claims notified to Seller or Purchaser pursuant to
the notice published pursuant to the relevant assets transfer
legislation applicable in China as set forth in Article 8 have
been paid in full or otherwise settled to the satisfaction of
the Purchaser. The Seller having confirmed to the Purchaser in
writing that it has had no further Claims in writing notified
to it in response to the notices served by it under the
relevant assets transfer legislation applicable in China,
other than those Claims which have been paid, compromised,
defended or otherwise dealt with subject to the prior consent
of, and to the satisfaction of the Purchaser;
5.1.6 the parties to the Contracts (other than the Seller) having
given their respective consents if required to the assignments
or novations of the same in favour of the Purchaser;
5.1.7 the Seller have certified in writing:
(i) there having occurred no Material Adverse Change in the
period between the date of this Agreement and Closing;
(ii) nothing having occurred or been omitted which is, or had
it occurred or been omitted on or before the date of
this Agreement would have constituted, a breach of the
Warranties;
(iii) no order or judgment of any court or governmental,
statutory or regulatory body having been issued or made
prior to Closing, which has the effect of making
unlawful or otherwise prohibiting the purchase of the
Purchased Assets by the Purchaser;
(iv) the Seller having performed or complied with, in all
material respects, all covenants, obligations and
agreements contemplated by this Agreement
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to be performed or complied with by it at or prior to
Closing, including without limitations those set forth
in Article 5.
5.1.8 any and all approvals, consents, registrations and permissions
necessary for or to the best benefit of the Transaction
contemplated hereby having been duly obtained from the
appropriate government authorities, including, without
limitation, approval of this Agreement, approval of the
employment settlement plan of Seller, and approval of the
transfer of "bonded" equipment from Seller to Purchaser.
5.1.9 all corporate and other proceedings and actions taken in
connection with the Transaction contemplated hereby and all
certificates, opinions, agreements, instruments, release and
documents referenced herein, or incident to the Transaction
contemplated hereby, being in form and substance satisfactory
to Purchaser.
5.2 Responsibility for Satisfaction
Without prejudice to the foregoing, it is agreed that all requests and
enquiries from any government, governmental, trade agency, court or
regulatory body shall be dealt with by the Seller and the Purchaser in
consultation with each other and each of the Seller and the Purchaser
shall promptly co-operate with and provide all necessary information and
assistance reasonably required by such government, agency, court or body
upon being requested to do so by the other.
5.3 Non-Satisfaction
5.3.1 If any of the conditions in Article 5.1 is not satisfied or
waived by the Purchaser within 6 months after the execution of
the Agreement such other date as the Purchaser and Seller may
agree or the Purchaser becomes aware of any fact that would
prevent any of the conditions in Article 5.1 from being
satisfied, the Purchaser may, in its sole discretion, by
written notice to the Seller, terminate this Agreement and no
Party shall have any claim against any other under it, save
for any claim arising from any antecedent breach (including
breach of any undertaking contained in Article 5.1).
5.3.2 In the event that the Purchaser shall terminate this Agreement
in accordance with Article 5.3.1, and without limiting the
Purchaser's right to claim all obligations of the Seller under
this Agreement, the Purchaser shall, unless otherwise
expressly stated, cease to enjoy and assume all rights and
liabilities hereunder, but, for the avoidance of doubt, all
rights and liabilities of the Parties which have accrued
before termination shall continue to exist.
ARTICLE 6 ACTION PENDING CLOSING
6.1 Seller's General Obligations
The Seller undertakes to procure that from the date of this Agreement
until Closing:
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6.1.1 the Seller will carry on HSR Business only in the ordinary and
usual course and in the manner and scope carried on as at the
date of this Agreement, save insofar as agreed in writing by
the Purchaser;
6.1.2 the Purchaser and its agents will, upon reasonable notice, be
allowed access to the employees and premises of the Seller and
shall also be allowed access to, and to take copies of, the
books and records of the Seller, the HSR Business and the
Purchased Assets including, without limitation, the statutory
books, minute books, leases, licences, contracts, details of
receivables, tax records, supplier lists and customer lists in
the possession or control of the Seller;
6.1.3 such representatives and advisers as the Purchaser requests
may be designated to work with the Seller with regard to the
management and operations of the HSR Business. The Seller will
consult with such representatives and advisers with respect to
any action which may materially affect the HSR Business of the
Seller taken as a whole. The Seller will furnish to such
representatives and advisers such information as it may
reasonably request for this purpose;
6.1.4 the Seller shall take all reasonable steps to preserve its
property and assets in relation to the HSR Business (including
the Purchased Assets) and, shall notify the relevant insurance
companies of the interest of the Purchaser in the Insurances
and shall procure that with effect from the Closing Date the
interest of the Purchaser therein is noted on the relevant
Insurance policies;
6.1.5 the Seller shall promptly provide to the Purchaser monthly
Management Accounts in the usual form.
6.2 Restrictions on the Seller
Without prejudice to the generality of Article 6.1, the Seller shall not
between the date of this Agreement and Closing (except as may be expressly
provided in this Agreement) without the prior written consent of the
Purchaser:
6.2.1 enter into or amend any contract or commitment in relation to
the HSR Business: (i) which is not capable of being terminated
without compensation at any time with one months' notice or
less; or (ii) which is not in the ordinary and usual course of
business and on arms' length terms or (iii) which involves or
may involve total revenue or total expenditure in excess of
US$500,000 (excluding purchase contracts for raw materials);
6.2.2 incur any indebtedness in relation to the HSR Business
otherwise than in the ordinary and usual course of business;
6.2.3 save as required by law, make any amendment to the terms and
conditions of employment (including, without limitation,
remuneration, pension entitlements and other benefits) of any
employee or consultants engaged in the HSR Business, provide
or agree to provide any gratuitous payment or benefit to any
such person or any of their dependants, or dismiss or
terminate (except with good cause) the engagement of any such
person or engage or appoint any additional employee in
relation to the HSR Business;
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6.2.4 acquire or agree to acquire or sell, transfer, lease, assign
or dispose of or agree to sell, transfer, lease, assign or
dispose of any material asset or material stocks or enter into
or amend any material contract or arrangement in relation to
the HSR Business;
6.2.5 sell, convey, lease, assign or otherwise transfer or dispose
of any interest in any debts or factor any notes or amounts
receivable in relation to the HSR Business;
6.2.6 delay making payment to any trade creditors of the HSR
Business generally beyond the date on which payment of the
relevant trade debt should be paid in accordance with credit
periods authorised by the relevant creditors (or (if
different) the period extended prior to the date of this
Agreement by creditors in which to make payment);
6.2.7 amend, to any material extent, any of the terms on which
goods, facilities or services in relation to the HSR Business
are supplied, such supplies being material in the context of
the HSR Business, except where required to do so in order to
comply with any applicable legal or regulatory requirement;
6.2.8 enter into any guarantee, indemnity or other agreement to
secure any obligation of a third party or create or agree to
create any Encumbrance over any of its assets or undertaking
in relation to the HSR Business (including the Purchased
Assets);
6.2.9 amend or discontinue any insurance contract in relation to the
HSR Business or the Purchased Assets, fail to notify any
insurance claim in accordance with the provisions of the
relevant policy or settle any such claim below the amount
claimed;
6.2.10 acquire or agree to acquire any share, shares or other
interest in any company, partnership or other venture or
incorporate any subsidiary in relation to the HSR Business;
6.2.11 make any change to its accounting practices or policies or
accounting reference date or amend its articles of association
(or equivalent constitutional documents);
6.2.12 make any substantial change in the nature or organisation of
its HSR Business;
6.2.13 discontinue or cease to operate all or a material part of the
HSR Business or resolve to be wound up;
6.2.14 change its residence for Taxation purposes;
6.2.15 commence, compromise or discontinue any legal or arbitration
proceedings in relation to the HSR Business (other than in
respect of the collection of debts which are not material in
the context of the HSR Business in the ordinary and usual
course of business); or
6.2.16 acquire or agree to acquire or dispose of or agree to dispose
of any land use rights or leasehold interest in land in
relation to the HSR Business.
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6.3 Covenant to Pay
The Seller covenant to pay to the Purchaser an amount equal to the Losses
suffered or incurred by the Purchaser or, subject to Closing, through the
Seller's failure or delay in complying with the provisions of Articles 6.1
and 6.2.
6.4 Exercise of Purchaser's Rights
It is hereby acknowledged (for the avoidance of doubt) that none of the
provisions of this Article 6 or the exercise or failure to exercise by the
Purchaser of its rights thereunder, shall give rise to any liability on
the part of the Purchaser or any of its employees, consultants or
representatives or any person connected with it.
ARTICLE 7 CLOSING
7.1 Closing shall take place at the offices of the Seller or such other place
as the Purchase and Seller may agree, on the Closing Date.
7.2 On the Closing Date:
7.2.1 the Seller shall deliver or cause to be delivered to the
Purchaser:
(i) such conveyances, assurances, transfers, assignments,
releases, novation agreements, consents and other
documents duly executed by the relevant parties as the
Purchaser may require to vest in the Purchaser the full
benefit of and legal title to the Purchased Assets and
all other rights and assets hereby agreed to be sold and
the full benefit of this Agreement and all liabilities
and debts agreed to be assumed including without
limitation;
(a) duly executed assignments in the Agreed Form of
the Accounts Receivable;
(b) duly executed assignments or novation agreements
in the Agreed Form of the Contracts;
(c) duly executed assignments in the Agreed Form of
the Accounts Payable;
(d) duly executed assignments or novation agreements
in the Agreed Form of the Borrowings;
(e) in respect of each of the motor vehicles used in
the HSR Business owned by the Seller (if any), the
prescribed notice and the vehicle registration
documents (and shall deliver or procure delivery
of a duplicate of the prescribed notice to the
relevant transportation authorities in China as
soon as possible after Closing);
(ii) the title deeds and documents relating to the Leased
Properties and Owned Properties occupied or owned by the
Seller (all re-registered in the name of the Purchaser);
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(iii) all subsisting contracts, license and permits in
connection with the HSR Business and all books, papers,
records and other documents (including financial
records) relating to the HSR Business and Purchased
Assets and all lists of customers and suppliers and
other information or documents in relation to the HSR
Business as the Purchaser may require;
(iv) all the designs and drawings, plans, technical and sales
publications, advertising material, brochures,
catalogues and other technical and sales matter of the
Seller in relation to the HSR Business together with any
plates, blocks, negatives and other like material
relating thereto as the Purchaser may require;
(v) any other documents of title relating to any of the
other Purchased Assets as the Purchaser may require;
(vi) such other documents as may be required to give to the
Purchaser good title to the Purchased Assets and to
enable the Purchaser or its nominees to become the
registered owner thereof as the Purchaser may require;
and
(vii) certificate in writing duly executed by the Seller
pursuant to Article 5.1.7 confirming the matters
mentioned thereunder.
7.2.2 the Seller shall permit the Purchaser to take possession of
the HSR Business and Purchased Assets.
7.3 Upon Closing, the Seller shall deliver to the Purchaser a copy of the
resolution of the shareholders assembly of the Seller approving and
authorizing the transfer of the Purchased Assets hereunder and all the
transactions contemplated hereby, and such resolution shall be in form and
substance in accordance with the applicable laws and regulations.
7.4 Within three (3) months upon compliance by the Seller with the provisions
of Articles 7.2.1 and 7.2.2 the Purchaser will pay the Purchase Price to
the Seller in accordance with Article 3.
7.5 Without prejudice to any other remedies available to the Purchaser, if in
any respect the provisions of Article 7.2 are not complied with on the
Closing Date the Purchaser may:
7.5.1 defer Closing to a date not more than thirty (30) days after
the Closing Date (and so that the provisions of this Article
7.5 shall apply to Closing as so deferred); or
7.5.2 proceed to Closing so far as practicable (without prejudice to
its rights hereunder); or
7.5.3 terminate this Agreement, and without limiting the Purchaser's
right to claim all obligations of the Seller under this
Agreement, the Purchaser shall, unless otherwise expressly
stated, cease to enjoy and assume all rights and liabilities
hereunder, but, for the avoidance of doubt, all rights and
liabilities of the Parties which have accrued before
termination shall continue to exist.
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ARTICLE 8 NOTICE OF SALE OF THE PURCHASED ASSETS
The Seller shall, within not more than 10 days from the date on which Seller's
board of directors and/or shareholders assembly have approved the sale of the
Purchased Assets pursuant to this Agreement, give notice to its creditors and
release public announcement of the sale of the Purchased Assets contemplated
under this Agreement in accordance with the provisions of the M&A Regulations
and the publication costs of such notifications shall be borne by the Seller.
The Purchaser and the Seller shall notify each other as soon as practicable in
the event of any Claim being received by any of them pursuant to such
notification. Any such notice given shall be without prejudice to the rights and
obligations of the Parties, as against each other, under this Agreement.
ARTICLE 9 WARRANTIES
The Seller warrants, represents and undertakes to the Purchaser as to the
matters set forth hereunder:
9.1 General Warranties
9.1.1 The Accounts and Management Accounts:
Except as otherwise disclosed to the Purchaser:
(i) have been prepared in accordance with Chinese GAAP;
(ii) are accurate and show a true and fair view of the
affairs of the Seller and the HSR Business as at the
specified accounting date and of its results for the
accounting reference period ended on that date, with the
Management Accounts having been properly prepared in a
manner consistent with that adopted in the preparation
of the management accounts of the HSR Business for all
periods during the financial year ended on the Accounts
Date;
(iii) comply with the requirements of all relevant statutes;
(iv) are prepared on consistent bases and policies of
accounting;
(v) are not affected by any unusual or non-recurring items.
9.1.2 Purchased Assets
(i) Title to Purchased Assets
Otherwise disclosed in writing:
the Purchased Assets included in the Accounts and
Management Accounts or acquired by the Seller since the
Accounts Date (other than trading stock disposed of
since that date in the ordinary course of business) and
all other Purchased Assets used or employed by the
Seller
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are the absolute property of the Seller free from any
mortgage, charge, lien, bill of sale or other
encumbrance and are not the subject of any leasing,
hiring or hire-purchase agreement or agreement for
payment on deferred terms or assignment or factoring or
other similar agreement or any interests of the third
parties, and all such assets are in the possession or
under the control of the Seller.
(ii) Condition of plant machinery and equipment
the machinery, office equipment, computer systems and
vehicles used by the Seller in the HSR Business are in
good repair, regularly maintained and normally usable
and comply with any applicable legal requirement or
restriction, and the vehicles are duly licensed and
suitable for the purposes for which they are used.
(iii) Control of records and information
all records and information belonging to the Seller
(whether or not held in written form) are in its
exclusive possession, under its direct control and
subject to unrestricted access by it.
9.1.3 Borrowings
(i) in relation to the HSR Business and the Purchased
Assets, except as otherwise disclosed to the Purchaser
in the manner acceptable to the Purchaser, the Seller
does not have outstanding any obligation for the payment
or repayment of money, whether present or future, actual
or contingent, in respect of:
(a) monies borrowed or raised;
(b) any recourse to a company selling or discounting
receivables in respect of receivables sold or
discounted;
(c) moneys raised under any bond, note, stock, or
other security;
(d) moneys raised under or in respect of acceptance
credit and documentary credit facilities;
(e) the acquisition cost of assets or services to the
extent payable after the time of acquisition or
possession;
(f) rental payments under chattel leases and hire
purchase agreement; or
(g) any guarantee, indemnity or other assurance
against or arrangement intended to prevent or
limit loss in respect of any obligation for the
payment or repayment of money described in
paragraphs (a) to (f) above (any such obligation
being referred to below as a "BORROWING").
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(ii) Except as otherwise disclosed to the Purchaser in the
manner acceptable to the Purchaser, the Seller does not
have subsisting over the whole or any part of its
present or future revenues or assets in relation to the
HSR Business any encumbrance, mortgage, charge, pledge,
lien or other security interest or any other agreement
or arrangement having a similar effect.
(iii) no Borrowing of the Seller has become or is now due and
payable, or capable of being declared due and payable,
before its normal or originally stated maturity and no
demand or other notice requiring the payment or
repayment of money before its normal or originally
stated maturity has been received by the Seller.
(iv) no event or circumstance has occurred, or may occur with
the giving of notice or lapse of time determination of
materiality or satisfaction of any other condition, such
as to entitle any person to require the payment or
repayment of any Borrowing before its normal or
originally stated maturity or which is or shall be such
as to terminate, cancel or render incapable of exercise
any entitlement to draw money or otherwise exercise the
rights of the Seller under an agreement relating to
Borrowing.
9.1.4 Environment
Except as otherwise disclosed to the Purchaser:
(i) the Seller has complied with the applicable
environmental law:
(ii) there are no circumstances in relation to the Seller or
the HSR Business which give rise or could give rise or
have given rise to any civil, criminal, administrative
or other action, claim, suit, complaint, proceeding,
investigation, decontamination, remediation or
expenditure by any person or competent authority under
Environmental Law in relation to any matter including
properties now owned or formerly owned by the Seller or
used in the HSR Business;
(iii) the Seller has obtained and there are in full force and
effect and the Seller has at all times complied with all
Permits necessary for the HSR Business, there are no
circumstances which could lead to the revocation,
cancellation, suspension, modification, variation or
alteration of such Permits and there are no
circumstances which necessitate any works, remediation
or expenditure (other than routine maintenance) in order
to continue to comply with the Permits;
(iv) at no time has the Seller received from the governmental
environment authority any unresolved notice or
intimation alleging a breach of the terms of a Permit or
alleging any other breach of the applicable
environmental law;
(v) all assessments reviews reports returns information and
audits required by the applicable environmental law or
any Permit have been properly carried out and submitted
to the appropriate authorities and their
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recommendations and requirements implemented where
required by the applicable environmental law;
(vi) there are no circumstances which could require any
further Permits to be obtained in connection with the
current HSR Business of the Seller which require works,
remediation or additional expenditure to ensure
compliance with such Permits.
9.1.5 Commercial Arrangements and Conduct
Except as otherwise disclosed to the Purchaser:
(i) Material contracts
In relation to the HSR Business and the Purchased
Assets, there is not outstanding:
(a) any contract of guarantee, indemnity or suretyship
or any contract to secure any obligation of any
person;
(b) any joint venture, consortium or partnership
agreement or arrangement to which the Seller is a
party;
(c) any sale or purchase option or similar agreement
or arrangement affecting any assets owned or used
by the Seller or by which it is bound;
(d) any liability, obligation or commitment of any
kind (other than those listed in (a) to (c) above)
on the part of the Seller (including a capital
commitment) which:
(1) is incapable of complete performance
within three months from the date of
Agreement; or
(2) has not been incurred in the ordinary
course of business; or
(3) is, or is likely to be, of major
significance to the Seller; or
(4) exceeds, or is likely to exceed, in
aggregate a sum of US$500,000.
(ii) Effect of Agreement on other agreements
there is no agreement or arrangement in relation to the
HSR Business and the Purchased Assets between the Seller
and any other person which shall or may be terminated as
a result of this Agreement (or Closing) or which shall
be affected by it or which includes any provision with
respect to a change in the control, management or
shareholders of the Seller.
(iii) Commercial position
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so far as the Seller is aware:
(a) there is no substantial customer or supplier of
the Seller in relation to the HSR Business who has
ceased purchasing from or supplying to it or who
is likely after the date of this Agreement (or
Closing) to reduce substantially or terminate
purchases from or supplies to it;
(b) there are no special circumstances which might
lead to the supply by the Seller or to it of any
goods or services, in relation to the HSR Business
being restricted or hindered.
(iv) Restrictive agreements and anti-competitive behaviour
so far as the Seller is aware:
(a) the Seller does not infringe and has not infringed
any legislation applicable in any jurisdiction
relating to anti-competitive agreements or
practices or behaviour or any similar matter;
(b) the Seller is not in relation to the HSR Business,
bound by or party to any order or decision made or
undertakings (binding or not) given to or any
court or tribunal of competent jurisdiction or any
similar authority in any jurisdiction, under or in
any law, regulation or administrative process
relating to fair competition anti-trust,
monopolies, mergers or other similar matters;
(c) the Seller has not in relation to the HSR
Business, within the last two years been party to
any merger or other similar arrangement which was
capable of review by any anti-trust or similar
authorities in any jurisdiction.
(v) Notice of official action
the Seller is not aware of any process, notice or
communication, formal or informal, by or on behalf of
any authority of any country having jurisdiction in
anti-trust matters, in relation to any aspect of the HSR
Business or the conduct of the Seller or any agreement
or arrangement to which the Seller is or was, or is
alleged to be or have been, a party, and so far as the
Seller is aware it is not likely to receive any such
process, notice or communication.
9.1.6 Litigation, Defaults and Insurance
Except as otherwise disclosed to the Purchaser:
(i) Legal proceedings
the Seller is not engaged or proposing to engage in any
litigation, arbitration, prosecution or other legal
proceedings, and there are no
17
claims or actions (whether criminal or civil) in
progress, outstanding, pending or threatened against the
Seller, any of its assets or any of its directors or
officers or in respect of which the Seller is liable to
indemnify any party concerned.
(ii) Unlawful acts by the Seller
so far as the Seller is aware:
neither the Seller nor any of its directors, officers or
employees has by any act or default committed, to the
extent adversely impacting the normal operation of the
Purchaser:
(a) any criminal or unlawful act in connection with
the business of the Seller, other than minor road
traffic offences;
(b) any breach of trust in relation to the business or
affairs of the Seller;
(c) any breach of contract or statutory duty or any
tortious act which could entitle any third party
to terminate any contract to which the Seller is a
party or could lead to a claim against the Seller
for damages, compensation or an injunction.
(iii) Defaults by others
So far as the Seller is aware, no party with whom the
Seller has entered into any contract in relation to the
HSR Business or the Purchased Assets is in default under
it, and there are no circumstances likely to give rise
to such a default.
(iv) Official investigations
so far as the Seller is aware, no governmental or
official investigation or inquiry concerning the Seller
is in progress or threatened and there are no
circumstances which are likely to give rise to any such
investigation or inquiry.
(v) Adequacy of insurance
the Seller has, and since 2003 has had, valid insurance
cover in respect of the HSR Business and the Purchased
Assets:
(a) against all risks (including product liability for
a period of at least six months) normally insured
against by companies carrying on the same type of
business or having similar assets;
(b) for the full replacement value of the Purchased
Assets and for such amount in respect of the HSR
Business as would in the circumstances be prudent
for such a business;
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(c) from a well-established and reputable insurer.
(vi) Policies
All policies of insurance taken out in connection with
the HSR Business or the Purchased Assets have been
disclosed to the Purchaser, are written in the name of
the Seller and are in full force and effect; and the
Seller has not done or omitted to do or allowed anyone
to do or not to do anything which might render any of
those policies void or voidable and has complied with
all conditions attached to them.
(vii) Claims
No claim under any policy of insurance taken out in
connection with the HSR Business or the Purchased Assets
is outstanding and, so far as the Seller is aware, there
are no circumstances likely to give rise to such a
claim.
9.1.7 Corporate Organisation and Business
Except as otherwise disclosed to the Purchaser:
(i) Corporate Status
The Seller (including any of its representative offices
or branches) has been duly incorporated and constituted,
and is legally subsisting under the laws of its
respective place of incorporation.
(ii) Title to HSR Business and Purchased Assets
The Seller has a good and marketable title to, and is
the exclusive legal and beneficial owner of the HSR
Business and the Purchased Assets, and, therefore, has
an absolute right to sell and transfer the HSR Business
and the Purchased Assets. All the Purchased Assets will
be sold to the Purchaser free and clear of any
Encumbrance together with all accrued beneficial rights
attached to them at the date of this Agreement or
subsequently becoming attached to them;
(iii) Licences, permissions or consents
so far as the Seller is aware, all licences, permissions
and consents required for the carrying on of the HSR
Business of the Seller have been obtained by it and are
in full force and effect, and the Seller is not aware of
any circumstances indicating that any of those licences,
permissions or consents is likely to be revoked or not
renewed in the ordinary course.
(iv) Existence of subsidiaries and other business
The Seller does not have, and has never had, any
subsidiary. Save for the HSR Business, the Seller has
not carried on any other HSR Business.
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(v) No material change
No material changes have occurred to the HSR Business
since the Accounts Date.
(vi) Conflict of Interest
Save for the HSR Business carried on by the Seller, the
Seller does not and whether on its own account or in
conjunction with or on behalf any person, firm or
company, directly or indirectly or whether as a
shareholder, partner, agent or otherwise, carry on, and
is not engaged or interested in a competing business or
restricted services save for the holding of investment
up to two (2) % of any class of securities quoted or
dealt in on a recognized stock exchange.
9.1.8 Miscellaneous
Except as otherwise disclosed to the Purchaser:
(i) Insolvency
(a) No order has been made and no resolution has been
passed for the winding up of, or a provisional
liquidator to be appointed in respect of, the
Seller and no petition has been presented and no
meeting has been convened for the purpose of
winding up the Seller;
(b) no receiver has been appointed in respect of the
Seller, the HSR Business or the Purchased Assets;
(c) the Seller is not insolvent or unable to pay its
debts within the meaning of the applicable
legislation to which it is subject and the Seller
has not stopped paying its debts as they fall due;
(d) no event analogous to any of the foregoing has
occurred with respect to the Seller in any
jurisdiction outside China;
(e) no unsatisfied judgment is outstanding against the
Seller.
(ii) Consents
All consents, permissions, approvals and agreements of
third parties which are necessary or desirable for the
Seller to obtain in order to enter into and perform this
Agreement in accordance with its terms have been
unconditionally obtained in writing and have been
disclosed to the Purchaser.
(iii) Material information
all information relating to the Seller, the HSR Business
and the Purchased Assets which is known or would on
reasonable enquiry be known to the
20
Seller and which should be known by a Purchaser for a
proper valuation of the Purchased Assets has been
disclosed to the Purchaser.
(iv) Brokers and Finders
No person or entity acting on behalf or under the
authority of the Seller is or will be entitled to any
broker's, finder's or similar fee or commission in
connection with the transactions contemplated hereby.
(v) Recitals and disclosures
The recitals, Schedules to the Agreement and all
information and documents relating to the HSR Business
and Purchased Assets (including without limitation
budgets and forecasts) supplied by the Seller or any
agent of Seller to the Purchaser, its lawyers,
accountants or other agents or advisers during or with a
view to the negotiations leading up to the Agreement,
are true and accurate in material respects, and there is
no fact not disclosed which would render any such
information or document inaccurate or misleading or
which, if disclosed, might reasonably affect the
willingness of the Purchaser to purchase the Purchased
Assets for the consideration or otherwise on the terms
specified in the Agreement.
9.1.9 Authority of the Seller
Except as otherwise disclosed to the Purchaser:
(i) The Seller has full power and authority to enter into
and perform this Agreement and the provisions of this
Agreement, when executed, will constitute valid and
binding obligations on the Seller, in accordance with
its terms;
(ii) The execution and delivery of, and the performance by
the Seller of its obligations under, this Agreement will
not result in a breach of any order, judgment or decree
of any court or governmental agency to which any Seller
is a party or by which it is bound;
(iii) None of the Seller or any of its agents or advisers is
aware of any fact or matter which would or may
constitute a breach of any of the Seller's Warranties.
9.2 Tax Warranties
Seller represents and warrants:
(i) That it will pay any and all taxes in compliance with the
applicable laws and regulations;
(ii) that all forms, filings, and information provided to any
taxing authority were timely filed and were, at the time of
filing and continue to be, complete and accurate;
21
(iii) so far as the Seller is aware, there is no liability in
respect of taxation (whether actual or contingent) or any
liability for interest, penalties or charges imposed in
relation to any taxation arising in any part of the world that
is not adequately disclosed or provided for in full in the
Accounts and Management Accounts;
(iv) so far as the Seller is aware, Seller is not and has not in
the last three years been the subject of a Tax Authority
unresolved investigation or other dispute regarding Tax or
duty recoverable from the Seller or regarding the availability
of any relief from Tax or duty to the Seller and there are no
facts which are likely to cause such an investigation or audit
to be instituted or such a dispute to arise and all returns
made by the Seller are agreed with the appropriate Tax
Authority;
(v) Seller has neither been a party to nor otherwise involved in
any transaction, scheme or arrangement:
(a) the sole or dominant purpose of which was to obtain a
tax benefit by the avoidance, postponement or reduction
of a liability to tax within the meaning of the
applicable tax legislation.
(b) which reduces or would reduce the amount of tax payable
by any person and which is artificial or fictitious or
in respect of which any disposition is not given effect
to within the meaning of the applicable tax legislation.
(vi) Seller will assist Buyer in responding to any future inquiry
from or dispute with a Taxing Authority.
9.3 Property Warranties
Except as otherwise disclosed to the Purchaser:
9.3.1 Interests
The Properties comprise, and will as at Closing comprise, all
the land, buildings and premises used in the HSR Business
owned by the Seller or occupied by the Seller or in which the
Seller has, or will as at Closing have, any interest.
9.3.2 Insurance
(i) Where the Seller is responsible for maintaining
insurance in respect of any of the Leased Properties,
the policy conforms in all respects with the
requirements of the Lease.
(ii) True and complete copies of all insurance policies, in
respect of the Leased Properties for which the Seller is
responsible for maintaining insurance, have been
delivered to the Purchaser.
(iii) The Seller has not done or omitted to do anything which
may result, directly or indirectly, in any of the
insurance policies may become void or voidable.
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(iv) No claims outstanding or circumstances which the Seller
is aware of which would give rise to a claim under any
of the insurance policies.
9.3.3 Owned Properties
The Owned Properties represent all the real properties owned
by the Seller or in respect of which the Seller has any
estate, interest, right or liability (as defined below), and
in respect of each of the Owned Properties:
(i) the Seller is the sole beneficial owner of and has a
proper legal title (in the form of granted land use
rights the premium for which has been fully paid) to the
Owned Properties and is entitled to transfer, dispose,
sell, mortgage or otherwise deal with the Owned
Properties and is entitled the use of such property in
the manner in which it is used or is proposed to be
used;
(ii) except as otherwise created for the Assumed Liabilities
and disclosed to the Purchaser in the manner acceptable
to the Purchaser, each of the Owned Properties held by
the Seller is free from mortgage, debenture, charge,
lien, lease, encumbrances or any third party rights and
the Seller has not entered into any agreement to do any
of the foregoing;
(iii) the Seller has not received or is not aware of there
being any notice from any government or other competent
authorities requiring it to revise the terms of the
ownership rights relating to the Owned Properties or
adversely affecting the Owned Properties or the rights
of the Seller in relation thereto;
(iv) all land premium, purchase price, land grant fees or
other fees payable in respect of the Owned Properties
have been paid in full and will be duly paid up to the
date of Closing and no further such premiums, price or
fees are payable under any applicable laws;
(v) none of the terms and conditions contained in the
relevant sale and purchase or transfer contracts, deed
of mutual covenants, government grant, occupation
permit, real estate title certificate, land use right
certificate, building ownership certificates and/or
certificate of ownership and the applicable laws, rules
and regulations have been breached in respect of the
Owned Properties;
(vi) the Seller has duly performed and observed all the terms
and conditions contained in the sale and purchase or
transfer contracts (if any), assignment, deed of mutual
covenant, land use right certificate and building
ownership certificates for the Owned Properties to be
performed and observed on the part of the Seller as
Purchaser thereof;
(vii) all relevant legal requirements or conventions for
notarization and registration of the sale and purchase
contracts and assignments for the Owned Properties have
been complied with;
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(viii) the land and building ownership rights pertaining to
the Owned Properties are valid and subsisting and has
not been amended, modified or supplemented in any manner
whatsoever;
(ix) no contracts have been entered into by the Seller to
sell, assign, subdivide, let or lease, licence, charge,
mortgage, partition, share, grant any option over or
otherwise dispose of an interest in or part with the
possession or occupation of the Owned Properties or any
part thereof or otherwise encumber the Owned Properties
nor is there any agreement by the Seller to do any of
the aforesaid;
(x) the Seller is in physical possession and actual
occupation of, each and every one of the Owned
Properties on an exclusive basis and no right of
occupation or enjoyment has been acquired or is in the
course of being acquired by any third party or has been
granted or agreed to be granted to any third party;
(xi) except as otherwise included in the Assumed Liabilities,
the Seller does not have any outstanding liabilities
under the terms and conditions upon which the land and
building ownership rights pertaining to the Owned
Properties are granted;
(xii) except as otherwise disclosed to the Purchaser in the
manner acceptable to the Purchaser, the Owned Properties
are not subject to any restrictive covenants,
stipulations, easements, licences, restrictions or other
like rights vested in third parties other than those
stipulated in the terms and conditions upon which the
land and building ownership rights pertaining to the
Owned Properties are granted which terms and conditions
are of a usual nature with reference to such terms and
conditions in China;
(xiii) there are no circumstances which would entitle or
require any person to exercise any powers of entry or
taking possession of the Owned Properties;
(xiv) compliance has been made with all applicable statutory
and by-law requirements with respect to the Owned
Properties;
(xv) all requisite licences, certificates and authorities
necessary for the existing use of the Owned Properties
by the Seller have been duly obtained and are in full
force, validity and effect;
(xvi) there are no disputes with any adjoining or neighbouring
owner with respect to boundary walls and fences, or with
respect to any easement, right or means of access to the
Owned Properties;
(xvii) the Owned Properties are used by the Seller for legal
purposes and has not violated any relevant land or
construction regulations;
(xviii) all requisite approvals, consents, permits and
licences necessary for the user of the Owned Properties
as it is presently being used by the Seller have been
duly obtained and are in full force, validity and
effect;
24
(xix) no default (or event which with notice or lapse of time
or both will constitute a default) by the Seller has
occurred or is continuing under the government grant,
occupation permit, deed of mutual covenant, land use
right certificate, building ownership rights certificate
and/or other documents applicable to the property and it
is not in breach of any applicable laws, rules,
regulations, guidelines, notices, circulars, orders,
judgments, decrees or rulings of any court, government,
governmental or regulatory authorities in respect of the
use occupation and enjoyment of the Owned Properties;
(xx) all requisite planning and building approvals required
for any government, local or public authority with
respect to the Owned Properties have been obtained and
are in full force and effect;
(xxi) all the buildings and other structures on the Owned
Properties are in good and substantial repair and fit
for the purposes for which they are being used; and
(xxii) there is (and has been) no breach of any applicable
statutory, by-law or regulatory requirement as to fire
precautions, public health, pollution, discharge of
effluents, environmental or any other matters to which,
in respect of any of the Owned Properties compliance is
required.
9.3.4 Other involvement in relation to property
So far as the Seller is aware, the Seller has not at any time:
(i) had vested in it (whether as an original tenant or
undertenant or as an assignee, transferee or otherwise)
any immovable property used in relation to the HSR
Business other than the Properties.
(ii) given any covenant or entered into any agreement, deed
or other document (whether as a tenant or undertenant or
as an assignee, transferee, guarantor or otherwise) in
respect of any immovable property used in relation to
the HSR Business in respect of which any contingent or
potential liability remains with the Seller other than
those disclosed to the Purchaser in relation to the
Properties.
(iii) done, omitted or knowingly suffered or been party or
privy to any act, deed, matter or thing whereby or by
means whereof the Properties or any part thereof are or
can or shall or may be impeached, charged, affected or
encumbered in title, estate or otherwise.
9.4 The Seller acknowledges that, in entering into this Agreement and in
purchasing the Purchased Assets, the Purchaser has relied and will reply
upon the Warranties given herein and the Warranties as confirmed by the
Seller.
9.5 Each of the Warranties shall be construed as a separate warranty and shall
not be otherwise limited or restricted by reference to or inference from
the terms of any other Warranty or any other term of this Agreement.
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9.6 The Seller shall procure that the Warranties are true and accurate in
material respects at the date of this Agreement and, for this purpose the
Warranties shall be deemed to be repeated at the Closing Date and any
express or implied reference therein to the date of this Agreement shall
be replaced by a reference to the Closing Date. The Warranties shall
remain in full force and effect notwithstanding Closing.
9.7 The Purchaser shall be entitled to claim both before and after Closing
that any of the Warranties is or was untrue or misleading or has or had
been breached even if the Purchaser discovered or could have discovered on
or before Closing that the Warranty in question was untrue misleading or
had been breached and Closing shall not in any way constitute a waiver of
any of the Purchaser's rights.
9.8 The rights and remedies of the Purchaser in respect of a breach of any of
the Warranties shall not be affected by Closing, by any investigation made
by or on behalf of the Purchaser into the affairs of the Seller and the
HSR Business, by the giving of any time or other indulgence by the
Purchaser to any person, by the Purchaser rescinding or not rescinding
this Agreement, or by any other cause whatsoever except a specific waiver
or release by the Purchaser in writing; and any such waiver or release
shall not prejudice or affect any remaining rights or remedies of the
Purchaser.
9.9 All representations and warranties made by the Seller contained in this
Agreement, any Exhibit, Schedule, certificate or other instrument
specifically referred to in the Warranties pursuant hereto or made in
writing by or on their behalf in connection with the transactions
contemplated by this Agreement, and all indemnification obligations of the
Seller under this Agreement shall survive the execution and delivery of
this Agreement and the Closing of the transactions contemplated hereunder.
All statements contained in any Exhibit, Schedule, certificate or other
instrument specifically referred to in the Warranties shall be deemed
representations and Warranties under this Agreement.
9.10 The Seller undertakes with the Purchaser that it will both before and
after Closing promptly notify the Purchaser in writing of any event or
circumstance of which it becomes aware which is or may be inconsistent
with any of the Warranties or which might make any of the Warranties
untrue or misleading if given at Closing.
ARTICLE 10 INDEMNIFICATION
10.1 General Indemnification
10.1.1 As used in this Article 10.1, the following terms shall have
the following meanings:
(i) "EVENT OF INDEMNIFICATION" with respect to the Seller
shall mean:
(a) any untruth, inaccuracy or breach of any
representation or Warranty relating to anything
undisclosed to Purchaser as of the Closing Date,
any untruth, inaccuracy, omission, in
non-compliance with PRC laws and regulations or
breach of any representation or Warranty relating
to anything disclosed the Purchaser as of the
Closing Date, or any breach or failure of
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observance or performance of any agreement,
undertaking, commitment, obligation, indemnity or
covenant of the Seller contained in this Agreement
(including the Schedules) or in any certificate or
other writing delivered in connection herewith at,
before or after Closing or any facts or
circumstances constituting such untruth,
inaccuracy or breach; and
(b) except for the Assumed Liabilities, any other
Claims, liabilities or obligations of any kind or
nature relating to the HSR Business or the
Purchased Assets arising from, relating to or in
connection with the HSR Business, operations or
affairs of the Seller or any of the assets,
properties, interests in assets or properties or
rights of the Seller which were existing at or as
of Closing or arising in whole or in part out of
any acts, transactions, conditions, circumstances
or facts which occurred or existed on or prior to
Closing, and which were not disclosed on or before
the execution of this Agreement and explicitly
assumed by Purchaser pursuant to this Agreement.
(ii) "LOSSES" shall mean any and all Losses sustained,
suffered or incurred by any Indemnified Person directly.
10.1.2 "INDEMNIFIED PERSONS" shall mean and include the Purchaser and
its respective officers, directors, employees, Affiliates,
successors and assignees.
10.1.3 The Seller shall indemnify, defend and hold harmless the
Indemnified Persons, and each of them, from and against any
and all Losses and Claims (including Claims by third party)
arising from or in connection with any Event of
Indemnification.
10.1.4 This indemnity is to be a continuing security to the Purchaser
for each representation, Warranty, agreement, undertaking,
commitment, obligation, indemnity or covenant on the part of
the Seller under or pursuant to this Agreement notwithstanding
settlement of account or other matter or thing whatsoever.
10.1.5 This indemnity is in addition and without prejudice to and not
in substitution for any rights or security which the Purchaser
may now or hereafter have or hold for performance and
observance of any agreement, undertaking, commitment,
obligation, indemnity or covenant on the part of the Seller
under or in connection with this Agreement.
10.1.6 The Guarantor shall be jointly and severally liable for the
liabilities of the Seller under Article 10.1, as well as all
other liabilities of Seller arising under this Agreement.
10.2 Exercise of Purchaser's Rights
10.2.1 Without prejudice to any other right or remedy of the
Purchaser hereunder, if before Closing the Purchaser becomes
aware that any of the material Warranties was at the date of
this Agreement, or has since become, untrue or misleading or
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that the Seller is in breach of any term of this Agreement,
the Purchaser shall be entitled to, by written notice to the
Seller, terminate this Agreement without liability to the
Seller. In the event of the termination of this Agreement,
without limiting the Purchaser's right to claim all
obligations of the Seller under this Agreement, the Purchaser
shall, unless otherwise expressly stated, cease to enjoy and
assume all rights and liabilities hereunder, but, for the
avoidance of doubt, all rights and liabilities of the Parties
which have accrued before termination shall continue to exist.
10.2.2 The rights, including rights of rescission, conferred on the
Purchaser by this Agreement are in addition and without
prejudice to all other rights and remedies available to the
Purchaser; and no exercise or failure to exercise a right
under this Agreement or otherwise or to invoke a remedy shall
constitute a waiver of that right or remedy by the Purchaser.
ARTICLE 11 GUARANTEE AND INDEMNITY BY GUARANTOR
11.1 In consideration of the Purchaser entering into this Agreement, Guarantor
hereby unconditionally and irrevocably guarantees to the Purchaser the due
and punctual performance and observance by the Seller of all obligations,
commitments, undertakings, warranties, indemnities and covenants under or
pursuant to this Agreement and agrees to indemnify the Purchaser and its
Affiliates against any and all Losses and Claims which the Purchaser or
any of its Affiliates may suffer through or arising from any breach by the
Seller of such obligations, commitments, warranties, undertakings,
indemnities or covenants. The liability of Guarantor as aforesaid shall
not be released or diminished by any arrangements or alterations of terms
(whether of this Agreement or otherwise) or any forbearance, neglect or
delay in seeking performance of the obligations hereby imposed or any
granting of time for such performance.
11.2 Guarantor hereby waives any right which it may have to require the
Purchaser to proceed first against or claim payment from the Seller to the
intent that as between the Purchaser and Guarantor the latter shall be
liable as principal obligor as if it had entered into all undertakings,
agreements and other obligations jointly and severally with the Seller.
11.3 This guarantee and indemnity is to be a continuing security to the
Purchaser for all obligations, commitments, warranties, undertakings,
indemnities and covenants on the part of the Seller under or pursuant to
this Agreement notwithstanding any settlement of account or other matter
or thing whatsoever.
11.4 This guarantee and indemnity is in addition to and without prejudice to
and not in substitution for any rights or security which the Purchaser may
now or hereafter have or hold for the performance and observance of the
obligations, commitments, undertakings, covenants, indemnities and
warranties of the Seller under or in connection with this Agreement.
11.5 As a separate and independent stipulation, Guarantor agrees that any
obligation expressed to be undertaken by the Seller under this Agreement
(including, without limitation, any moneys expressed to be payable under
this Agreement) which may not be enforceable against or recoverable from
the Seller by reason of any legal limitation, disability or incapacity of
the Seller or any other fact or circumstance shall nevertheless
28
be enforceable against or recoverable from Guarantor as though the same
had been incurred by Guarantor and Guarantor was sole or principal
obligors in respect thereof and shall be performed or paid by Guarantor on
demand.
ARTICLE 12 FORCE MAJEURE
12.1 Scope of Force Majeure. A "FORCE MAJEURE EVENT" shall mean any event,
circumstance or condition that (i) directly or indirectly prevents the
fulfillment of any material obligation set forth in this Contract, (ii) is
beyond the reasonable control of the respective Party, and (iii) could
not, by the exercise of reasonable care, have been avoided or overcome in
whole or in part by such Party. Subject to the aforementioned items (i),
(ii) and (iii), Force Majeure Event includes, but is not limited to,
natural disasters such as acts of God, earthquake, windstorm and flood,
terrifying events such as war, terrorism, civil commotion, riot, blockade
or embargo, fire, explosion, off-stream or strike or other labor disputes,
epidemic and pestilence, material accident or by reason of any law, order,
proclamation, regulation, ordinance, demand, expropriation, requisition or
requirement or any other act of any governmental authority, including
military action, court orders, judgments or decrees.
12.2 Notice. Should any Party be prevented from performing the terms and
conditions of this Agreement due to the occurrence of a Force Majeure
Event, the prevented Party shall send notice to the other Parties within
fourteen (14) days from the occurrence of the Force Majeure Event stating
in the details of such Force Majeure Event.
12.3 Performance. Any delay or failure in performance of this Agreement caused
by a Force Majeure Event shall not constitute a default by the prevented
Party or give rise to any claim for damages, losses or penalties. Under
such circumstances, the Parties are still under an obligation to take
reasonable measures to perform this Agreement, so far as is practical. The
prevented Party shall send notice to the other Parties as soon as possible
of the elimination of the Force Majeure Event, and confirm receipt of such
notice.
12.4 Consultations and Termination. Should the Force Majeure Event continue to
delay implementation of this Agreement for a period of more than three (3)
months, the Parties shall, through consultations, decide whether to
terminate or modify this Agreement. Should the Force Majeure Event
continue for a period of six (6) months or longer, any Party may terminate
this Agreement by giving written notice to the other Parties. In the event
of the termination of this Agreement, without limiting the Purchaser's
right to claim all obligations of the Seller under this Agreement, the
Purchaser shall, unless otherwise expressly stated, cease to enjoy and
assume all rights and liabilities hereunder, but, for the avoidance of
doubt, all rights and liabilities of the Parties which have accrued before
termination shall continue to exist.
ARTICLE 13 CONFIDENTIALITY
13.1 The Parties undertake with each other that they shall treat as strictly
confidential all information received or obtained by them or their
employees, agents or advisers as a result of entering into or performing
this Agreement including information relating to the provisions of this
Agreement, the negotiations leading up to this Agreement, the subject
matter of this Agreement or the business or Affairs of the Seller or the
Purchaser
29
and that it will not at any time hereafter make use of or disclose or
divulge to any person any such information (except in relation to the
operation of the HSR Business after Closing by the Purchase) and shall use
its best endeavours to prevent the publication or disclosure of any such
information.
13.2 The restrictions contained in Article 13.1 shall not apply so as to
prevent the Parties from making any disclosure required by law or by any
supervisory or regulatory or governmental body or from making any
disclosure to any professional adviser for the purposes of obtaining
advice (providing always that the provisions of this Article 13 shall
apply to and the Parties shall procure that they apply to and are observed
in relation to, the use or disclosure by such professional adviser of the
information provided to them) nor shall the restriction apply in respect
of any information which comes into the public domain otherwise than by a
breach of this Article 13 by any Party.
ARTICLE 14 GOVERNING LAW
The formation of this Agreement, its validity, interpretation, execution and any
performance of this Agreement, and the settlement of any Disputes hereunder,
shall be governed by published and publicly available laws, rules and
regulations of the PRC, the applicable provisions of any international treaties
and conventions to which the PRC is a party, and, if there are no published or
publicly available PRC laws, rules or regulations, or treaties or conventions
governing a particular matter, by general international commercial practices.
ARTICLE 15 DISPUTE RESOLUTION
15.1 Consultations and Arbitration. Any and all disputes, controversies or
claims (the "DISPUTE") arising out of or relating to the formation,
validity, interpretation, implementation or termination of this Agreement,
or the breach hereof or relationships created hereby shall be settled
through friendly consultations. If a Dispute is not resolved through
friendly consultations within thirty (30) days from the date a Party gives
the other Parties written notice of a Dispute, then it shall be resolved
exclusively and finally by arbitration in Beijing at the China
International Economic and Trade Arbitration Commission ("CIETAC") in
accordance with the arbitration rules of the CIETAC (the "CIETAC RULES")
for the time being in force which rules are deemed to be incorporated by
reference to this clause.
15.2 Arbitration Proceedings and Award. Any arbitration shall be heard before a
tribunal consisting of three (3) arbitrators. Each side of the Dispute
shall appoint one (1) arbitrator. The two arbitrators thus appointed shall
choose the third arbitrator who will act as the presiding arbitrator of
the tribunal. If the two arbitrators have not agreed on the choice of the
presiding arbitrator, the presiding arbitrator shall be appointed by the
Chairman of the CIETAC. The language of the arbitration shall be Chinese
and English . The arbitration shall be final and binding on the Parties,
shall not be subject to any appeal, and the Parties agree to be bound
thereby and to act accordingly. The award of the arbitrators may be
enforced by any court having jurisdiction to do so. Throughout any dispute
resolution and arbitration proceedings, the Parties shall continue to
perform this Agreement, to the extent practical, with the exception of
those parts of this Agreement that are under arbitration. Except as
otherwise determined by the arbitration tribunal, each Party shall be
responsible for its expenses incurred in connection with
30
resolving any Dispute, but the arbitration fees shall be borne by the
losing side of the Dispute.
15.3 Injunctive Relief. Notwithstanding any other provision of this Agreement,
each Party acknowledges that a breach of confidentiality as provided in
Article 13 or other obligations under this Agreement may result in
irreparable harm and damage to the affected Party and its Affiliates in an
amount that is difficult to ascertain and that cannot be adequately
compensated by a monetary award. Accordingly, in addition to any other
relief to which the affected Party and its Affiliates may be entitled,
such Party shall be entitled to temporary and/or permanent injunctive
relief from any breach or threatened breach by the relevant Party without
proof of actual damages that have been or may be caused to such Parties by
such breach or threatened breach.
ARTICLE 16 MISCELLANEOUS PROVISIONS
16.1 Language. This Agreement is written and executed in a Chinese version and
in an English version. Both language versions of this Agreement are of
equal validity and effect. In case of any discrepancy between the Chinese
version and the English version, the Chinese version approved by the
Examination and Approval Authority shall prevail.
16.2 Waiver and Preservation of Remedies. No delay on the part of any Party in
exercising any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any waiver on the part of any Party
of any right, power or privilege hereunder, nor any single or partial
exercise of any right, power or privilege hereunder, preclude any other or
other exercise thereof hereunder. The rights and remedies herein provided
are cumulative and are not exclusive of any rights or remedies that any
Party may otherwise have.
16.3 Notices. All notices or other communications under this Agreement shall be
in writing and shall be delivered or sent to the correspondence addresses
or facsimile numbers of the Parties set forth below or to such other
addresses or facsimile numbers as may be hereafter designated in writing
on seven (7) days' notice by the relevant Party. All such notices and
communications shall be effective: (i) when delivered personally; (ii)
when sent by telex, telefacsimile or other electronic means with sending
machine confirmation; (iii) ten (10) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid;
or (iv) four (4) days after deposit with a commercial overnight courier,
with evidence of delivery provided by the courier.
Seller Address: No. 98, Nanshan Road North, Rongcheng City,
Shandong Province, PRC
Tel: 0631-7523205
Fax: 0631-7523888
Attn: Zhang Junquan
Purchaser Address: No. 99, Qingshan Road West, Rongcheng City,
Shandong Province, PRC
Tel:
Fax:
Attn:
31
Guarantor Address: No. 98, Nanshan Road North, Rongcheng City,
Shandong Province, PRC
Tel: 0631-7523206
Fax: 0631-7506826
Attn: Zhang Junquan
16.4 Severability. If any provision of this Agreement should be or become fully
or partially invalid, illegal or unenforceable in any respect for any
reason whatsoever, the validity, legality and enforceability of the
remaining provisions of this Agreement shall not in any way be affected or
impaired thereby.
16.5 Entire Agreement. This Agreement, together with its Schedules and Exhibits
which are hereby incorporated by reference as an inseparable and integral
part of this Agreement, constitutes the entire agreement among the Parties
with reference to the subject matter hereof, and supersede any agreements,
contracts, representations and understandings, oral or written, made prior
to the signing of this Agreement.
16.6 Modification and Amendment. No amendment or modification of this
Agreement, whether by way of addition, deletion or other change of any of
its terms, shall be valid or effective unless a variation is agreed to in
writing and signed by authorized representatives of each of the Parties.
16.7 Successors. This Agreement shall inure to the benefit of and be binding
upon each of the Parties and their respective permitted successors and
permissible assignees.
16.8 Originals. This Agreement is executed in nine (9) original counterparts,
each of which shall have equal effect in law.
32
IN WITNESS WHEREOF, each of the Parties has executed this Agreement or has
caused this Agreement to be executed by its duly authorized officer or officers
as of the date first above written.
PURCHASER: SELLER:
COOPER CHENGSHAN (SHANDONG) PASSENGER SHANDONG CHENGSHAN TIRE COMPANY
TIRE COMPANY LTD. LIMITED BY SHARES
Represented by Cooper Tire Investment Holding
(Barbados) Ltd. before legal establishment:
By: By:
-------------------------- ---------------------------
Name: Harold C. Miller Name: Che Hongzhi
Title: President Title: Chairman
Nationality: U.S.A. Nationality: Chinese
GUARANTOR:
Confirmed and ratified after legal SHANDONG CHENGSHAN GROUP COMPANY
establishment:
By: By:
-------------------------- ---------------------------
Name: Name: Che Hongzhi
Title: Title: Chairman
Nationality: Nationality: Chinese
33
SCHEDULE 1
DEFINITIONS AND INTERPRETATION
ACCOUNTS -- The audited financial statements of the Seller (including, without
limitation, a balance sheet, profit and loss statement and cash flow statement
together in each case with the notes thereon) made up to the Accounts Date and
for the financial period from January 1, 2005 to the Accounts Date prepared in
accordance with relevant PRC laws and regulations, the Chinese GAAP, and in
manner consistent with past practice.
ACCOUNTS DATE -- The date of Closing.
AFFILIATES -- Any person which directly or indirectly controls, is controlled
by, or is under common control with Seller, or Seller or any of its related
companies; the term "control" means ownership, the power to elect or appoint
directors or senior management, and/or the ability to determine and enforce the
strategic, business or operations policies of any person.
AGREED FORM -- In relation to any document, such document in the terms agreed
between the Purchaser and Seller and signed by or on behalf of them for the
purposes of identification.
AGREEMENT -- This Assets Purchase Agreement
BUSINESS LICENSE -- The business license of the Purchaser as issued, amended and
replaced, as the case may be, from time to time by the Registration Authority.
CERTIFICATE OF APPROVAL -- The certificate of approval issued by the Examination
and Approval Authority approving the JV Contract and establishment of the
Purchaser.
CHINESE GAAP -- The general accepted accounting principles applicable in China,
consistently applied.
CLAIM -- Any claim, demand, dispute, action, suit, investigation or legal or
analogous proceedings
CLOSING -- The completion of the purchase by the Purchaser from the Seller of
the Purchased Assets in accordance with Article 7.
CLOSING DATE -- the date mutually agreed by the Parties subsequent to the
conditions in Article 5.1 being satisfied or such other date as is determined by
the Seller and Purchaser.
CONTRACTS -- The meaning set forth in Article 2.1.4
EMPLOYEES -- The employees to be employed in relation to the HSR Business by
Purchaser.
ENCUMBRANCES -- Any mortgage, charge (fixed or floating), pledge, lien,
hypothecation, trust, right of set off or other third party right or interest
(legal or equitable) including any right of pre-emption, assignment by way of
security, reservation of title or any other security interest of any kind
however created or arising or any other agreement or arrangement (including a
sale and repurchase arrangement) having similar effect.
34
EXAMINATION AND APPROVAL AUTHORITY -- The Ministry of Commerce, or its
authorized local division or any successor government institution or agency
empowered to approve the JV Contact, this Agreement, and any amendments,
supplements, modifications or termination thereof or hereof.
GUARANTOR -- Chengshan Group Company Limited.
HSR BUSINESS -- The business in relation to the half-steel radial tires for
passenger vehicles and light trucks, which has been carried on by Seller as part
of the business scope specified on the effective business license of Seller,
such as "production and sales of rubber products; import and export business
within the approved scope; sales of vehicles (including cars); contracting of
offshore rubber industry projects and onshore international tender offer
projects and exporting of the equipment and materials required for the aforesaid
projects; and expatriation of the labor personnel required for enforcing the
aforesaid offshore projects.
INSURANCES -- The policies of assurance and insurance in connection with the HSR
Business and the Purchased Assets and the Employees.
LEASE(s) -- The lease(s) or tenancy agreement(s) between the Landlord (as
therein defined) and the Seller by which the premises used by the HSR Business
was let to the Seller.
LEASED PROPERTIES -- All the real properties used by the HSR Business leased by
the Seller, particulars of which are set out in this Agreement.
LOSSES -- All losses, liabilities, costs (including, without limitation, legal
costs arising out of any disputes involving any third party), charges and
expenses.
MANAGEMENT ACCOUNTS -- The unaudited balance sheet of the Seller as at the
Management Accounts Date and the unaudited statements of profit and loss and
cash flow of the Seller for the period commencing from December 31, 2004 and
ended on the Management Accounts Date prepared in a manner consistent with past
practice.
MANAGEMENT ACCOUNTS DATE -- The date of Closing.
M&A REGULATIONS -- The Tentative Provisions Regarding Merger with, and
Acquisition of, Domestic Enterprises by Foreign Investors, promulgated by the
Ministry of Foreign Trade and Economic Cooperation, State Administration of
Taxation, State Administration for Industry and Commerce and State
Administration of Foreign Exchange on March 7, 2003, and effective as of April
12, 2003.
MATERIAL ADVERSE CHANGE -- Any material adverse change in the business, assets
or position (financial, trading or otherwise), profits or prospects of the HSR
Business or any event or circumstance that may result in such a material adverse
change. Without prejudice to the generality of the foregoing and to the extent
that any adverse change or series of adverse change can be quantified, any
adverse change to the extent of more than USD500,000 or series of adverse change
to the aggregate extent of more than USD500,000 shall be deemed to be a material
adverse change.
OWNED PROPERTIES -- All the real properties used by the HSR Business owned by
the Seller.
PRC -- People's Republic of China
35
PROPERTIES -- The Leased Properties and Owned Properties set out in this
Agreement.
PURCHASER -- Cooper Chengshan (Shandong) Passenger Tire Company Ltd., a
Sino-foreign limited liability company registered and incorporated under the
laws of the PRC, with its registered address at No. 99, Qingshan Road West,
Rongchen City, Shandong Province, PRC.
PURCHASED ASSETS -- The meaning set forth in Article 2.1
REGISTRATION AUTHORITY -- The State Administration of Industry and Commerce, or
its local division or any successor government institution or agency empowered
to issue a Business License to the Purchaser.
RENMINBI or RMB -- The lawful currency of the PRC
SELLER -- Shandong Chengshan Tire Company Limited by Shares. A company limited
by shares registered and incorporated under the laws of the People's Republic of
China, with its registered address at No. 98, Nanshan Road North, Rongchen City,
Shandong Province, People's Republic of China.
TAX AUTHORITY -- Any local, municipal, governmental, provincial, State or
fiscal, revenue, customs or excise authority, body, agency or official in China
having or purporting to have power or authority in relation to Tax, including
without limitation the PRC State Administration for Taxation or any other
relevant fiscal authority in China.
TAXATION/TAX -- All taxes, charges, duties, imposts, fees, levies or other
assessments, and all estimated payments thereof, including without limitation
income, business profits, property, sales, use, value added taxes (VAT),
environmental, franchise, customs, import, payroll, transfer, gross receipts,
withholding, social security, as well as stamp duties and other costs, imposed
by any Tax Authority, or any subdivision or agency thereof, and any interest and
penalty relating to such taxes, charges, fees, levies or other assessments.
WARRANT(IES) -- the warranties, representations, and undertakings stated in
Article 9.
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