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Item 1.01
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Entry into a Material Definitive Agreement
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On November 30, 2018, TMSR
Holding Company Limited (“
TMSR
” or the “
Company
”) entered into a Share Purchase Agreement
(“
SPA
”) with Jiangsu Rong Hai Electric Power Fuel Co., Ltd. (“
Rong Hai
”) and Jirong
Huang and Qihuang Wang, who collectively hold 100% equity interest of Rong Hai (collectively “
Rong Hai Shareholders
”).
Rong Hai is a company incorporated in China engaging in coal wholesales and sales of coke, steels, construction materials, mechanical
equipment and steel scrap.
Pursuant to the SPA, TMSR
shall issue an aggregate of 4,630,000 shares of TMSR’s common stock (“
TMSR Shares
”) to the Rong Hai Shareholders,
in exchange for Rong Hai Shareholders’ agreement to enter into, and their agreement to cause Rong Hai to enter into, certain
VIE Agreements (the “
Rong Hai VIE Agreements
”) with Shengrong Environmental Protection Technology (Wuhan) Co.,
Ltd. (“
WFOE
”), through which WFOE shall have the right to control, manage and operate Rong Hai in return for
a service fee approximately equal to 100% of Rong Hai’s net income (“
Acquisition
”).
The foregoing description
of the SPA does not purport to be complete and is qualified in its entirety by reference to the complete text of the SPA, which
is filed as Exhibit 10.1
On November 30, 2018, WFOE,
the Company’s indirectly owned subsidiary, entered into a series of VIE Agreements with Rong Hai and the Rong Hai Shareholders.
The VIE Agreements are designed to provide WFOE with the power, rights and obligations equivalent in all material respects
to those it would possess as the sole equity holder of Rong Hai, including absolute rights to control the management, operations,
assets, property and revenue of Rong Hai. Rong Hai has the necessary license to carry out coal trading business in China.
Material terms of each
of the Rong Hai VIE Agreements are described below:
Consulting Services
Agreement.
Pursuant to the amended and restated consulting services agreement between Rong Hai
and WFOE dated November 30, 2018, WFOE has the exclusive right to provide consulting services to Rong Hai relating to Rong Hai’s
business, including but not limited to business consulting services, human resources development, and business development. WFOE
exclusively owns any intellectual property rights arising from the performance of this agreement. WFOE has the right to determine
the service fees based on Rong Hai’s actual operation on a quarterly basis. This agreement will be effective as long as Rong
Hai exists. WFOE may terminate this agreement at any time by giving a prior written notice to Rong Hai.
The foregoing description
of the consulting services agreement does not purport to be complete and is qualified in its entirety by reference to the complete
text of the consulting services Agreement, which is filed as Exhibit 10.2.
Equity Pledge Agreement.
Under
the equity pledge agreement among WFOE, Rong Hai and the shareholders of Rong Hai dated November 30, 2018, the shareholders pledged
all of their equity interests in Rong Hai to WFOE to guarantee Rong Hai’s performance of relevant obligations and indebtedness
under the consulting services agreement. In addition, the shareholders of Rong Hai have completed the registration of the equity
pledge under the agreement with the competent local authority. If Rong Hai breaches its obligation under the consulting services
agreement, WFOE, as pledgee, will be entitled to certain rights, including the right to sell the pledged equity interests. This
pledge will remain effective until all the guaranteed obligations are performed.
The foregoing description
of the equity pledge agreement does not purport to be complete and is qualified in its entirety by reference to the complete text
of the equity pledge agreement, which is filed as Exhibit 10.3.
1
Call Option
Agreement.
Under the call option agreement among WFOE, Rong Hai and the shareholders of Rong
Hai dated November 30, 2018, each of the shareholders of Rong Hai irrevocably granted to WFOE or its designee an option to
purchase at any time, to the extent permitted under PRC law, all or a portion of his equity interests in Rong Hai. Also, WFOE
or its designee has the right to acquire any and all of its assets of Rong Hai. Without WFOE’s prior written consent,
Rong Hai’s shareholders cannot transfer their equity interests in Rong Hai, and Rong Hai cannot transfer its assets.
The acquisition price for the shares or assets will be the minimum amount of consideration permitted under the PRC law at the
time of the exercise of the option. WFOE may terminate the agreement early, whereas none of Rong Hai and its shareholders can
terminate this agreement.
The foregoing description
of the call option agreement does not purport to be complete and is qualified in its entirety by reference to the complete text
of the call option Agreement, which is filed as Exhibit 10.4.
Voting Rights Proxy
Agreement.
Under the voting rights proxy agreement among WFOE and the shareholders of Rong Hai
dated November 30, 2018, each shareholder of Rong Hai irrevocably appointed WFOE as its attorney-in-fact to exercise on such shareholder’s
behalf any and all rights that such shareholder has in respect of his equity interests in Rong Hai, including but limited to the
power to vote on its behalf on all matters of Rong Hai requiring shareholder approval in accordance with the articles of association
of Rong Hai. The proxy agreement will remain in effect unless WFOE terminates the agreement by giving a 30-day prior written notice
or gives its consent to the termination by Rong Hai.
The foregoing description
of the voting rights proxy agreement does not purport to be complete and is qualified in its entirety by reference to the complete
text of the voting rights proxy agreement, which is filed as Exhibit 10.5.
Operating Agreement.
Pursuant to the operating agreement among WFOE, Rong Hai and the shareholders of Rong Hai dated November 30, 2018, Rong Hai and
the shareholders of Rong Hai agreed not to enter into any transaction that could materially affect Rong Hai’s assets, obligations,
rights or operations without prior written consent from WFOE, including but not limited to the amendment of the articles of association
of Rong Hai. Rong Hai and its shareholders agree to accept and follow our corporate policies provided by WFOE in connection with
Rong Hai’s daily operations, financial management and the employment and dismissal of Rong Hai’s employees. Rong Hai
agreed that it should seek guarantee from WFOE first if any guarantee is needed for Rong Hai’s performance of any contract
or loan in the course of its business operation. The agreement shall be in effective as long as Rong Hai exists. None of Rong Hai
and its shareholders can terminate this agreement. WFOE may terminate the agreement by giving a 30-day prior written notice.
The foregoing description
of the operating agreement does not purport to be complete and is qualified in its entirety by reference to the complete text of
the operating agreement, which is filed as Exhibit 10.6.
All the Rong Hai VIE
Agreements became effective immediately upon their execution.