China Automotive Systems Inc – ‘8-K’ for 10/23/04 – EX-1

On:  Wednesday, 10/27/04, at 7:12am ET   ·   For:  10/23/04   ·   Accession #:  1145549-4-1417   ·   File #:  0-33123

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Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         China Automotive Systems, Inc.                         4     12K 
 2: EX-1        EX-1 Equity Exchange Agreement                         4     12K 

EX-1   —   EX-1 Equity Exchange Agreement

EX-1
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EXHIBIT 1 

 EQUITY EXCHANGE AGREEMENT

THIS AGREEMENT is made by and between Party A and Party B at Jingzhou City on   
October 23, 2004.                                                               

Party A:    Great Genesis Holding Limited                                       

Address:    6/F, Wheelock House, 20 Pedder Street, Central, Hong Kong           

Name of the Legal Representative:     Hanlin, Chen                              

Party B:    Hubei Wanlong Investment Co. Ltd.                                   

Address:    Building 5-2, Guandong Science and Technology Park, Wuhan, Hubei,   
People's Republic of China                              

Name of the Legal Representative:     Shengbing Yu                              

WHEREAS:                                                                        

Party A legally holds 51% equity interest in Jingzhou Henglong Fulida Textile   
Co. Ltd. (hereinafter referred to as "Fulida") and Party B legally holds 2.5%   
equity interest in Jingzhou Henglong Automotive Parts Manufacturing Co. Ltd.    
(hereinafter referred to as "Henglong").                                        

Party A and Party B, under the principles of equality and free will and through 
friendly consultation, have agreed to exchange the aforesaid equity interests   
being held by the respective party pursuant to the agreed terms of this         
agreement. Therefore, the parties have reached an agreement based on the terms  
set out below and have agreed to jointly abide by them:                         

1.       GUARANTEE                                                              

1.1      Party A hereby guarantees that its 51% equity interest in Fulida to be 
    exchanged with Party B is legally held by Party A and that Party A
    holds a complete and effective right to dispose of the said equity
      interest. Party A hereby guarantees that the said equity interest is
         free and clear from any mortgage rights or other security interests and
      that the said equity interest is and shall be held harmless from the
    recourse of any third party. Otherwise, Party A shall bear all the
legal and economic liabilities arising therefrom.             

1.2      Party B hereby guarantees that its 2.5% equity interest in Henglong to 
       be exchanged with Party A is legally held by Party B and that Party B
    holds a complete and effective right to dispose of the said equity
      interest. Party B hereby guarantees that the said equity interest is
         free and clear from any mortgage rights or other security interests and
that the said equity interest is                              

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  and shall be held harmless from the recourse of any third party.
      Otherwise, Party B shall bear all the legal and economic liabilities
arising therefrom.                                            

2.       EQUITY EXCHANGE BASE DATE                                              

  Both Party A and Party B agree that the base date for the equity
interest exchange shall be August 31, 2004.                   

3.       EQUITY EXCHANGE                                                        

         Both Party A and Party B agree that Party A will utilize the 51% equity
      interest it holds in Fulida to exchange for the 2.5% equity interest
        Party B holds in Henglong according to the terms under this agreement.
        After the equity exchange, Party A shall be the owner of the said 2.5%
         equity interest in Henglong, and Party B shall be the owner of the said
51% equity interest in Fulida.                                

4.       EQUITY EXCHANGE VALUE DIFFERENCE                                       

      Both Party A and Party B agree that the value difference between the
         equity exchange shall be paid for in cash. Specifically, within 30 days
  after the effectiveness of this agreement, Party A shall pay RMB
750,000 to Party B as the value difference.                   

5.       RIGHTS AND OBLIGATIONS                                                 

5.1      Both Party A and Party B agree that starting from September 1, 2004,   
     Party A shall enjoy the rights and bear the obligations of the said
        2.5% equity interest in Henglong that was previously enjoyed and borne
    by Party B. Party B shall no longer enjoy such rights and shall no
    longer bear a shareholder's obligations of the said portion of the
equity interest in Henglong anymore.                          

5.2      Both Party A and Party B agree that starting from September 1, 2004,   
         Party B shall enjoy the rights and bear the obligations of the said 51%
    equity interest in Fulida that was previously enjoyed and borne by
        Party A. Party A shall no longer enjoy such rights and shall no longer
    bear a shareholder's obligations of the said portion of the equity
interest in Fulida anymore.                                   

6.       BREACH OF CONTRACT LIABILITIES                                         

        If either party to this agreement breaches any terms of this agreement
    and does not fulfill its obligations properly and completely, such
        party shall bear the liabilities for such breach. Where the defaulting
         party causes any liabilities and damages to the other party as a result
         thereof, the defaulting party shall indemnify the non-defaulting party.

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7.       AMENDMENT AND RESCISSION OF THIS AGREEMENT                             

 Upon the occurrence of any of the following circumstances, this
        agreement may be amended or rescinded, but a written agreement must be
  signed by both Party A and Party B in order for any amendment or
rescission to take effect.                                    

7.1      Due to Force Majeure or any outside causes not attributable to the     
        fault of any party and not within such party's ability to prevent that
have rendered this agreement unable to be performed.          

7.2      Due to any change of circumstances, after consultation with each other 
     both Party A and Party B have consented to amendment or rescission.

8.       GOVERNING LAW AND SETTLEMENT OF DISPUTE                                

8.1      This Equity Exchange Agreement shall be governed and interpreted by the
laws of the People's Republic of China.                       

8.2      Party A and Party B shall engage in friendly consultation to resolve   
    any dispute arising out of or concerning this agreement. Where the
     disputes fail to be resolved by consultation, both Parties agree to
         submit the disputes to the Jingzhou City Arbitration Committee and such
   arbitration shall be conducted in Jingzhou in accordance with the
        arbitration procedures of the said Committee. The arbitral award shall
be final and binding on both parties.                         

9.       CONDITIONS FOR THIS AGREEMENT TO TAKE EFFECT                           

       This agreement shall go into effect only after it has been signed and
      sealed by the respective legal representatives authorized by Party A
   and Party B and upon the approval of the original examination and
approval authority.                                           

10.      OTHERS                                                                 

    This agreement shall have six sets of originals, where Party A and
     Party B shall each have one set, and Fulida and Henglong shall each
       have one set. The remaining sets of originals shall be kept on record
with the relevant government authorities.                     

Party A:        Great Genesis Holding Limited                                   

Legal Representative:                                                           

        (signature/seal)

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Party B:        Hubei Wanlong Investment Co. Ltd                                

Legal Representative:                                                           

        (signature/seal)

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Dates Referenced Herein

				Referenced-On Page
This ‘8-K’ Filing		Date		First		Last			Other Filings
Filed on:		10/27/04							None on these Dates
For Period End:		10/23/04		1
		9/1/04		2
		8/31/04		2
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