UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 30, 2016
CLEANTECH SOLUTIONS INTERNATIONAL, INC.
(Exact name of registrant as specified in Charter)
Nevada | 001-34591 | 90-0648920 | ||
(State or other jurisdiction of incorporation or organization) |
(Commission File No.) | (IRS
Employee Identification No.) |
No. 9 Yanyu Middle Road
Qianzhou Village, Huishan District, Wuxi City
Jiangsu Province, People’s Republic of China
(Address of Principal Executive Offices)
(86) 51083397559
(Registrant’s Telephone number)
Copies to:
Asher S. Levitsky PC
Ellenoff Grossman & Schole LLP
1345 Avenue of the Americas
New York, New York 10105-0302
Phone: (212) 370-1300
Fax: (646) 895-7182
E-mail: alevitsky@egsllp.com
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement
Item 2.01 Completion of Acquisition or Disposition of Assets
Pursuant to an agreement dated December 30, 2016, the Company, through its wholly-owned subsidiary Fulland Limited, sold the stock of Wuxi Fulland Wind Energy Equipment Co., Ltd. (“Fulland Wind”), to Wang Jiahong for a sales price of RMB48 million (approximately $6.9 million). The Company’s wind power equipment business was conducted through Fulland Wind. The purchase price is payable in three installments. The first installment of RMB 14,400,000 (approximately $2.1 million), which was payable three days after the contract is in force, has been paid. A second installment of RMB 14,400,000 (approximately $2.1 million) is due within six months after the transfer registration formalities are completed and, if the equity transfer registration formalities are completed within one year without any third party claims on the equity transfer, a final payment of RMB 19,200,000 (approximately $2.7 million) is due 25 working days after the expiration of such period.
Contemporaneously with the sale of the Fulland Wind stock, Wuxi Huayang Heavy Industry Co., Ltd. (“Heavy Industry”), entered into a lease with Wang Jiahong for a factory building owned by Heavy Industry at an annual rental of RMB 680,566 (approximately $98,000). The lease has a ten-year term, commencing January 1, 2017. The first year’s rent is payable in two installments, the first installment, equal to 30% of the annual rental, being due on signing the lease, has been paid. The balance is due before the end of 2017. Heavy Industries is a variable interest entity owned by the Company’s chief executive officer and his wife and whose financial statements are included in the Company’s consolidated financial statements.
Fulland Wind owns assets related to manufacturing of rolled rings and related products. The identifiable long-lived tangible assets allocated to the forged rolled rings and related components were valued at $0 at September 30, 2016 and $14,212,045 at December 31, 2015. The identifiable long-lived assets that had been allocated to the forged rolled rings and related equipment segment at December 31, 2015 had been allocated at September 30, 2016 to the dyeing and finishing equipment segment to the extent that the assets could be used by that segment and the balance to equipment held for sale.
The sale of Fulland Wind followed declining sales of forged rolled rings and related components, which were approximately $32,000 for the three months ended September 30, 2016 and $437,000 for the nine months ended September 30, 2016. The net loss allocated to this segment was approximately $113,000 for the three months ended September 30, 2016 and approximately $1.5 million for the nine months ended September 30, 2016. As a result of the sale of Fulland Wind, the Company will reflect the operations of the rolled rings and related products segment as a discontinued operation in its financial statements.
Item 9.01 Financial Statements and Exhibits.
(d) | Exhibits. |
99.1 | English translation of agreement dated December 30, 2016 between the Company and Wang Jiahong. | |
99.2 | English translation of lease dated December 30, 2016 between Wuxi Huayang Heavy Industry Co., Ltd. and Wang Jiahong |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: January 6, 2017 | Cleantech Solutions International, Inc. | |
By: | /s/ Jianhua Wu | |
Jianhua Wu | ||
Chief Executive Officer |
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Exhibit 99.1
Equity Transfer Agreement
Party A (Transferor): FULLAND LIMITED
Legal representative: Wu Jianhua
Party B (Transferee): Wang Jiahong
1. When sign this agreement, the Party A is the shareholder of Wuxi Fulland Windpower Equipment Co. Ltd. (hereinafter referred to as Target Company), Party A holds 100% equity in the Target Company.
2. Party A agrees to transfer 100% of its shares to Party B, and Party B agrees to accept the share in accordance with the terms and conditions stipulated in this agreement.
After friendly consultations between both parties, the following agreement is reached on the transfer of shares:
Article 1 Basic situation of target company
1. Target Company was founded in August 27, 2008, address: No.18, Huihe Road, Qianzhou Matching Zone, Huishan Economic Development Zone, Wuxi City, company type: limited liability company (foreign owned), registered capital is 9,520,000$, as of the signing of this agreement is paid in capital of RMB 64,125,965.53 Yuan. The legal representative of target company: Wu Jianhua, its business scope is: Production and processing of wind power gearbox, shaft, gear ring, and shaft ring; manufacturing and maintenance of metal container (Without pressure vessel); Production of petrochemical equipment, dyeing and finishing equipment (Setting machine)
2. At the time of signing this agreement, the shareholders of the Target Company and their proportion is 100%
Article 2 Statement and guarantee of all parties
1. Party A has paid all Target Company investment, there is no false investment or capital flight situation.
2. Party A guarantees that transferred share of the Target Company to Party B is true and lawful. Party A guarantees that there is no guarantee of any right to the transferred equity interest, and shall not be subject to recourse by any third party, and shall not be subject to judicial or administrative organs that have been ruled by law or otherwise restricted.
3. Any time after the commencement of this agreement, Party A promise not to sign any form of legal documents, or take any other legal means in any form to disposal under this agreement, including but not limited to the disposal of transfer, pledge, entrust management etc.
4. Party A guarantees to cooperate with Target Company and Party B to sign the relevant legal documents of industrial and commercial alteration, and to complete all the procedures of industrial and commercial alteration of the Target Company.
5. Party B has the right to sign and perform this agreement.
Article 3 The transfer of the subject matter, the transfer of share and payment
1. Party A will transfer its 100% equity of Target Company to Party B.
2. The payment of this transfer is RMB forty-eight million Yuan (Amount in figure: 48,000,000 Yuan).
3. The payment of the transfer could be paid as the second way following:
(1) Lump-sum payment
Party B shall pay Party A lump-sum payment of the equity transfer within one working day since the date of agreement entry into force. Party A shall assist Target Company and Party B to complete the procedures for the transfer of shares of the Target Company under this agreement within the working days from the date of payment of the aforesaid sum by Party A and Party B should go to the administrative department for Industry and commerce for transfer.
(2) Installment payment
The first term: within 3 working days after the agreement entry into force, Party B shall pay the transfer fee: fourteen million four hundred thousand Yuan (Amount in figure: 14,400,000 Yuan).
Second term: within 3 days when the party A received the first payment, should hand Party B the business license, seal, books, business contracts and personnel roster of Target Company
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The third term: Party A shall assist the Target Company and Party B to the Department Of Administration For Industry and Commerce to complete the transferred share procedures of Target Company within 7 working-days when received the above-mentioned funds under the agreement. Within 6 months after the transfer registration formalities completed, Party B shall pay the transfer fee fourteen million four hundred thousand Yuan (lowercase: 14,400,000 Yuan).
If the equity transfer registration formalities completed date within one year without any third party claims to Party B on the equity transfer, so within the 25 working days of the expiry period, Party B shall pay the payment nineteen million, two hundred thousand Yuan (Amount in figure: 19,200,000 Yuan).
(3) Other payment methods
4. If there is any breach of this agreement by Party A, Party B has the right to transfer the unpaid part which deducted by Party A, and shall pay liquidated damages to Party B and Target Company of the losses according to the agreement.
5. Party A shall, upon receipt of the transfer price of each period, issue a formal, legal and valid invoice to Party B.
Article 4 Debt treatment of the target company
1. The Target Corp debt disclosed in this Agreement shall be dealt with in the second way following
(1) Undertaken by target company
(2) Borne by Party B
Article 5 Equity delivery
1. The date of delivery of the shares under this Agreement shall be subject to the following first items in accordance with the law and the articles of association of the Targeted Company:
(1) After the date of the completion of the equity transfer of industrial and commercial registration.
(2) The name of Party B shall be recorded on the day of the registration as shareholders of the Target Company.
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(3) The date when Party A should deliver Business license, the stamp and books of Target Company to Party B
2. After stock delivery date, Party B can enjoy the rights of shareholders, and bear the obligation in accordance with the provisions of the law and the articles of association of the Target Company.
Article 6 Transition period arrangement
The period of the date from this agreement come into force to the date of settlement is the period for the transfer shares. During the transitional period:
1. Party A shall exercise its Target Company shareholders' rights in good faith, in addition to the Target Company's daily management expenses and the relevant matters concerning the transfer of the equity, the Target Company shall not add any debt, otherwise it shall be borne by Party A. At the same time, Party A shall not be entitled in any form to disposal the equity of the Target Company, which shall include but not limited to the pledge of shares, the commission management, etc.
Article 7 Fees ant taxes undertaken
All the fees and taxes of this transfer could be dealt with the first ways following:
1. Party A and Party B will undertake it, according to the relevant laws and regulations.
2. .
Article 8 Notification and delivery
A party shall send to the other party a notice of this agreement by mail, and the notice shall be deemed to be delivered to another Party in the first place listed in this agreement.
Article 9 Liability for Breach
1. Any breach of this agreement by either party constitutes a breach of contract.
2. If Party B can not pay the equity transfer fee in accordance with the provisions of this agreement, per overdue day, Party B should pay the overdue part 3% default to Party A, if overdue more than 30 days, Party A has the right to terminate this agreement separately, and the deduction of this agreement, Party B shall pay to Party A the subject of three percent of the amount of liquidated damages, and then will return the remaining part which Party B has paid to Party B.
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3. If Party A can not help Party B to complete all registration under this agreement within the stipulated time, every overdue day, Party A shall pay Party B the penalty at 3% of already paid payment, overdue more than 30 days, Party B has the right to unilaterally terminate this agreement, Party A shall return all the equity transfer Party B has paid the money, but also should paid three percent liquidated damage to Party B on the subject of the Agreement.
4. If Party A, in violation of the provisions of this agreement, makes false statements, guarantee or fail to fulfill its commitments, shall pay Party B the liquidated damages of three percent of the amount of this agreement, and compensate Party A for the corresponding losses.
5. Party A shall pay Party B the payment of liquidated damages on the basis of the proportion of the transferred shares in respect of the debts not disclosed to Party B.
6. If Party A, in violation of transfer period of this agreement, Party A shall pay Party B three percent of the liquidated damages.
7. If any party in violation of other obligations under this agreement, the defaulting party shall pay the amount of three percent of the liquidated damages to the other party.
Article 10 Change and Cancellation of Agreement
1. Upon mutual agreement, the parties may sign a written change agreement.
2. Legal provisions or the agreement of the party is entitled to terminate this agreement.
3. Terminate by agreement, if the transferring of shares of industrial and commercial registration procedures have been completed, both parties please deal with in accordance with the first way following:
(1) Within 10 working days from the date of termination of this agreement, Party A shall refund Party B. Within 20 working days when Party A refunds the aforesaid funds, Party B shall transfer the transferred share to Party A without any payment under the agreement.
(2) .
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Article 11 Force Majeure
Any party who fails to perform its obligations under this agreement due to enforce factors shall not be deemed to be a breach of contract, but shall take all necessary remedial measures under the conditions so as to reduce the losses caused by force majeure.
Article 12 Confidentiality
Neither Party shall make any disclosure or disclosure of this agreement, any other subsidiary documents, and transactions contemplated in this agreement, unless expressly required by law.
Article 13 Governing of law and disputes of resolution
1. The formation, performance and settlement of disputes in this Agreement shall be governed by the laws of the People's Republic of China.
2. Any disputes arising from the validity, performance, breach and termination of this Agreement shall be settled through friendly consultations. If the consultation fails, either party may bring a suit to the local People's Court.
Article 14 Condition of entry into force of this Agreement
Party A shall submit Party B the specified appendix of this Agreement and the documents entry into force on the date of signing or stamping by both parties.
Article 15 Others
This agreement is signed by both parties on December 22, 2016.
This agreement is made in five copies, each party will keep the one and shall be submitted to the administrative department for Industry and commerce, one of which is retained by the Target Corp, which shall have the same legal effect. Matters uncovered in this agreement can be negotiated by the parties, and signed a supplementary agreement, the supplemental agreement has the same legal effect with this agreement.
Party A (Seal):
Legal (authorized) representative (Signature): /s/ Wu Jianhua
Party B (Seal):
Legal (authorized) representative (Signature): /s/ Wang Jiahong
December 30, 2016
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Exhibit 99.2
Lease Contract of Factory Building
Party A: Wuxi Huayang Heavy Industry Co., Ltd.
Party B: Wang Jiahong
In accordance with the relevant provisions of the state, Party A and Party B shall, on the basis of voluntariness, equality and mutual benefit, on the issue of leasing the factory building which is legal owned by Party A to Party B for use, the parties shall conclude an agreement and sign the contract as follows:
I. Information of rental factory building
The rented factory to Party B's factory building is located in No.18, Huihe Road, Qianzhou Subdistrict Industrial Park, Huishan District, Wuxi City. The construction area is 8,507.07 square meters;
II. Lease term of factory building
1. The lease term of the factory building is 10 years, from January 1, 2017 to December, 2026
2. At the expiration of the lease term, Party A shall have the right to take back the leased factory building, Party B shall return it on schedule, if Party B needs to continue, please submit written request three months before the expiry to Party A, then sign the lease contract as long as Party A agrees.
III. Rent and payment
1. Party A and Party B agreed that the rent of per square meter construction area is 80 Yuan , so the total rent is 8,507.07 square meters *80 Yuan / square meter =680,565.60 Yuan, charged by annual.
2. Once both party signed the contract, it will come into force at once. Party B shall pay 30% lease fee as deposit to Party A, that is 204,169.68 Yuan, and the remaining fee 476,395.92 Yuan should be paid until the end of 2017.
VI. Other expenses
1. During the lease period, the expenses incurred by the use of water, electricity, gas, telephone and other communications in the factory building shall be borne by Party B
V. Use and maintenance responsibilities of factory building
1. During the lease term, Party B shall promptly notify Party A of the damage of the factory, and Party A shall repair it within 3 days after receiving the notice from Party B. If it is not repaired in time, Party B may repair it with paid by Party A.
2. Party B shall rationally make use of and take care of the plant and its attached facilities. Party B shall be responsible to maintain the factory building if it and its attached facilities are damaged or break down due to Party B's improper use or unreasonable use. If Party B refuses to maintain, Party A can maintain it instead, however Party B shall pay the expense.
3. Party B shall ask for the Party A's written consent if need any additional decoration or facilities and equipment, and examine and approved by relevant departments according to the provisions, need be approved by Party A as well as then can be carried out.
VI. Re-rent and return of factory building
1. In the lease period, if Party B need to re-rent the factory, please ask for Party A's written consent, Party B shall bear the relevant responsibility without the permit of Party A
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2. When the lease term comes to an end, the factory building shall conform to the normal operating condition when it is returned.
VII. Other relevant agreement during the period of lease
1. During the lease period, Party A and Party B shall abide by the laws and regulations of the state and shall not engage in illegal activities with the lease of the factory;
2. During the lease term, Party A shall have the right to supervise and assist Party B in fire control, safety and health;
3. During the lease period, if the factory building unable to fill the contract with force majeure or government cause, neither party bear the responsibility.
4. During the lease period, Party B can decorate according to the operating characteristics of their own, but shall not destroy the original structure of housing, renovation costs is paid by Party B, at the expiration of the lease, Party A does not make any compensation.
5. During the lease period, Party B shall pay the rent and other payment of all expenses timely, if the delay over one month, Party A has the right to charge 5% increase in fines, and have the right to terminate the lease agreement.
6. After the expiration of the lease term, if Party A continue to lease, Party B enjoy the right of priority, and if shall not be rented, Party B need to move on schedule, otherwise, all losses and consequences will be borne by Party B.
VIII. Other clauses
1. During the lease term, if Party A terminates the contract in advance, it shall compensate Party B for three months rent. During the lease term, Party B shall compensate Party A for three months' rent in case of breach of contract if Party B wants to terminate the contract in advance.
2. During the lease period, Party A shall bear all liability for compensation for any loss of normal operation caused by property Certificate.
This contract is in duplicate, Party A and Party B sign and seal it, then keep one of the copies.
Party A: /s/ Wu Jianhua
Party B: /s/ Wang Jiahong
December 30, 2016
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