Exhibit 10.2

 

EXECUTION VERSION

 

EQUITY CONTRIBUTION and voting AGREEMENT

 

This EQUITY CONTRIBUTION AND VOTING AGREEMENT (this “Agreement”), is made and
entered into as of November 29, 2019 by and among Ruili International Inc., a
Delaware corporation (“Parent”), and certain stockholders of SORL Auto Parts,
Inc., a Delaware corporation (the “Company”), listed on Schedule A hereto (each,
a “Rollover Stockholder” and collectively, the “Rollover Stockholders”).
Capitalized terms used but not defined herein shall have the meanings ascribed
to such terms in the Merger Agreement (as defined below).

 

RECITALS

 

WHEREAS, concurrently herewith, Parent, Ruili International Merger Sub Inc., a
Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), and
the Company are entering into an Agreement and Plan of Merger (as may be
revised, amended, restated and supplemented from time to time, the “Merger
Agreement”) pursuant to which, among other things, Merger Sub will merge with
and into the Company, with the Company continuing as the surviving corporation
and a wholly owned subsidiary of Parent (the “Merger”);

 

WHEREAS, as of the date hereof, each Rollover Stockholder is a “beneficial
owner” (within the meaning of Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the “Exchange Act”)) of the shares of common stock, par value
$0.002 per share, of the Company (the “Shares”), as set forth opposite such
Rollover Stockholder’s name in column (B) of Schedule A hereto (with respect to
each Rollover Stockholder, subject to adjustment as contemplated by Section
5(b), the “Rollover Shares”) (the Rollover Shares, together with any other
Shares acquired (whether beneficially or of record) by such Rollover Stockholder
after the date hereof and prior to the Effective Time, including any Shares
acquired by means of purchase, dividend or distribution, or issued upon the
exercise of any options or warrants or the conversion of any convertible
securities or otherwise, being collectively referred to herein as the
“Securities”);

 

WHEREAS, in connection with the consummation of the transactions contemplated by
the Merger Agreement including the Merger (the “Transaction”), each Rollover
Stockholder desires to (i) contribute their respective Securities to Parent
directly or indirectly in exchange for newly issued shares of common stock of
Parent, par value $0.001 per share (the “Parent Shares”), and (ii) vote his or
her Securities at the Stockholders’ Meeting in favor of the Merger, in each case
upon the terms and conditions set forth herein;

 

WHEREAS, as a result of such contribution by the Rollover Stockholders, Parent
would beneficially own approximately 58.83% of the total outstanding Shares, and
as a result of such issuance, the Parent Shares received by the Rollover
Stockholders or their respective designated parties pursuant to the transactions
contemplated herein would constitute a 58.83% of the voting rights in Parent
immediately after the Contribution Closing (as defined below);

 

WHEREAS, in connection with the consummation of the transactions contemplated by
the Merger Agreement and pursuant to an equity commitment letter, dated as of
November 29, 2019 (the “Equity Commitment Letter”), between Ruili Group Co.,
Ltd., a company incorporated in the PRC (including its successors or permitted
assigns, the “Sponsor”), and Parent, and a subscription agreement to be entered
into by the Sponsor and Parent, upon the terms and subject to the conditions of
the Equity Commitment Letter and such subscription agreement, the Sponsor will
contribute, or cause to be contributed, as an equity contribution to Parent, an
aggregate amount equal to US$37,502,844.96 in exchange for Parent Shares,
constituting a 41.16% of the voting rights in Parent immediately after the
Contribution Closing;

 

 

 

  

WHEREAS, receipt of the Stockholder Approval is a condition to the consummation
of the Merger;

 

WHEREAS, in order to induce Parent and Merger Sub to enter into the Merger
Agreement and consummate the transactions contemplated thereby, including the
Merger, the Rollover Stockholders are entering into this Agreement; and

 

WHEREAS, each Rollover Stockholder acknowledges that Parent and Merger Sub are
entering into the Merger Agreement in reliance on the representations,
warranties, covenants and other agreements of such Rollover Stockholder set
forth in this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Parent and each
Rollover Stockholder, intending to be legally bound hereby, agree as follows:

 

1. Contribution of Securities by Rollover Stockholders to Parent. Upon the terms
and subject to the conditions set forth herein, immediately prior to the Closing
and without further action by the Rollover Stockholders (except as described in
Section 4 below), all of each Rollover Stockholder’s right, title and interest
in and to the Securities shall be contributed, assigned, transferred and
delivered to Parent, free and clear of all Liens (other than any Liens arising
by reason of the Merger Agreement or this Agreement).

 

2. Issuance of Parent Shares. In consideration of the contribution, assignment,
transfer and delivery of the Securities to Parent pursuant to Section 1 of this
Agreement, Parent shall issue Parent Shares in the name of each Rollover
Stockholder (or in the name of a party as designated by such Rollover
Stockholder in writing and agreed by Parent before the Contribution Closing) in
the amounts set forth opposite such Rollover Stockholder’s name in column (D) of
Schedule A hereto. Each Rollover Stockholder hereby acknowledges and agrees that
(a) the value of the Parent Shares issued to such Rollover Stockholder or his or
her designated Affiliate is equal to (x) the total number of Rollover Shares
contributed by such Rollover Stockholder multiplied by (y) the per Share Merger
Consideration under the Merger Agreement, (b) delivery of such Parent Shares
shall constitute complete satisfaction of all obligations towards or sums due to
such Rollover Stockholder by Parent with respect to the applicable Securities,
and (c) on receipt of such Parent Shares, such Rollover Stockholder shall have
no right to any other consideration against the Parent with respect to the
Securities contributed to Parent by such Rollover Stockholder.

 

3. Closing. Subject to the satisfaction in full (or waiver) of all of the
conditions set forth in Article VIII of the Merger Agreement (other than
conditions that by their nature are to be satisfied at the Closing), the closing
of the contribution and exchange contemplated hereby (the “Contribution
Closing”) shall take place immediately prior to the Closing.

 

4. Deposit of Rollover Shares. No later than three (3) Business Days prior to
the Contribution Closing, each Rollover Stockholder or any agent of such
Rollover Stockholder shall deliver or cause to be delivered to Parent, for
disposition in accordance with the terms hereof, (a) duly executed stock power
for his or her Rollover Shares to Parent or as Parent may direct in writing, in
form reasonably acceptable to Parent, and (b) share certificates, if any,
representing his or her Rollover Shares (the “Rollover Shares Documents”). The
Rollover Shares Documents shall be held by Parent or any agent authorized by
Parent until the Contribution Closing.

 

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5. Irrevocable Election.

 

(a) The execution of this Agreement by each Rollover Stockholders evidences,
subject to Section 10, the irrevocable election and agreement by such Rollover
Stockholder to contribute his or her respective Securities in exchange for
Parent Shares at the Contribution Closing on the terms and conditions set forth
herein. In furtherance of the foregoing, each Rollover Stockholder covenants and
agrees, severally but not jointly, that from the date hereof until the
Expiration Time (as defined below), except as expressly contemplated under this
Agreement or the Merger Agreement, such Rollover Stockholder shall not, directly
or indirectly, (i) sell (constructively or otherwise), offer to sell, give,
pledge, encumber, assign, grant any option for the sale of or otherwise transfer
or dispose of (by merger, testamentary disposition, operation of law or
otherwise), or enter into any agreement, arrangement or understanding to sell or
otherwise transfer or dispose of (by merger, testamentary disposition, operation
of law or otherwise), an interest in any Securities (“Transfer”) or permit the
Transfer by any of his or her Affiliates of an interest in any Securities, (ii)
enter into any Contract, undertaking or understanding with respect to a Transfer
or limitation on voting rights of any of the Securities, or any right, title or
interest thereto or therein, (iii) deposit any Securities into a voting trust or
grant any proxy or enter into a voting agreement, power of attorney or voting
trust with respect to any Securities, (iv) take any action that would make any
representation or warranty of Parent set forth in the Merger Agreement or this
Agreement untrue or incorrect or could reasonably be expected to have the effect
of preventing, disabling or delaying such Rollover Stockholder from performing
his or her obligations under this Agreement or that is intended, or would
reasonably be expected, to impede, frustrate, interfere with, delay, postpone,
adversely affect or prevent the consummation of the Merger or the other
transactions contemplated by the Merger Agreement or this Agreement or the
performance by Parent of any of its obligations under this Agreement, (v)
exercise, convert or exchange, or take any action that would result in the
exercise, conversion or exchange, of any Securities, (vi) tender any Securities
into any tender or exchange offer, or (vii) agree (whether or not in writing) to
take any of the actions referred to in the foregoing clauses (i) through (vi).
Any purported Transfer, or other action, in violation of this paragraph shall be
null and void.

 

(b) Each Rollover Stockholder covenants and agrees, severally but not jointly,
that such Rollover Stockholder shall promptly (and in any event within 48 hours)
notify Parent and the Company of any new Shares with respect to which beneficial
ownership (within the meaning of Rule 13d-3 of the Exchange Act) is acquired by
such Rollover Stockholder, including, without limitation, by purchase, as a
result of a share dividend, share split, recapitalization, combination,
reclassification, exchange or change of such shares, or upon exercise,
conversion or exchange of any securities of the Company, if any, after the date
hereof. Any such Shares shall automatically become subject to the terms of this
Agreement as Rollover Shares, and Schedule A shall be deemed amended
accordingly.

 

6. Representations and Warranties of the Rollover Stockholders. In consideration
of Parent accepting the Securities, each Rollover Stockholder makes the
following representations and warranties, severally but not jointly and with
respect to himself or herself only, to Parent, each and all of which shall be
true and correct as of the date of this Agreement and as of the Contribution
Closing, and shall survive the execution and delivery of this Agreement:

 

(a) Ownership of Shares. Such Rollover Stockholder is the beneficial owner of,
and has good and valid title to, his or her respective Securities, free and
clear of Liens other than as created by this Agreement. Such Rollover
Stockholder has sole voting power, sole power of disposition, sole power to
demand dissenter’s rights (if applicable) and sole power to agree to all of the
matters set forth in this Agreement, in each case with respect to all of his or
her Securities, with no limitations, qualifications, or restrictions on such
rights, subject to applicable securities Laws, Delaware Laws and the terms of
this Agreement. As of the date hereof, other than the Rollover Shares and other
securities listed on Schedule A hereof, such Rollover Stockholder does not own,
beneficially or of record, any securities of the Company and any direct or
indirect interest in any such securities (including by way of derivative
securities). Such Rollover Stockholder’s Securities are not subject to any
voting trust agreement or other Contract to which such Rollover Stockholder is a
party restricting or otherwise relating to the voting or Transfer of the
Securities other than this Agreement. Such Rollover Stockholder has not
appointed or granted any proxy or power of attorney that is still in effect with
respect to any of his or her Securities, except as contemplated by this
Agreement. Except as described herein, there are no options, warrants or other
rights, agreements, arrangements or commitments of any character to which such
Rollover Stockholder is a party relating to the pledge, disposition or voting of
any of the Securities.

 

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(b) Capacity. Such Rollover Stockholder has legal capacity to execute and
deliver this Agreement and to perform his or her obligations hereunder, subject
to applicable securities Laws and the terms of this Agreement. This Agreement
has been duly and validly executed and delivered by such Rollover Stockholder
and, assuming due authorization, execution and delivery by Parent and the other
Rollover Stockholders, constitutes a legal, valid and binding obligation of such
Rollover Stockholder, enforceable against such Rollover Stockholder in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy or similar Laws affecting creditors’ rights generally and by general
principles of equity (regardless of whether considered in a proceeding in equity
or at Law).

 

(c) Consents and Approvals; No Violations. Except for the applicable
requirements of the Exchange Act, (i) no filing with, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary on
the part of such Rollover Stockholder for the execution, delivery and
performance of this Agreement by such Rollover Stockholder or the consummation
by such Rollover Stockholder of the transactions contemplated hereby; and (ii)
neither the execution, delivery or performance of this Agreement by such
Rollover Stockholder nor the consummation by such Rollover Stockholder of the
transactions contemplated hereby, nor compliance by such Rollover Stockholder
with any of the provisions hereof shall (A) require the consent or approval of
any other Person pursuant to any Contract binding on such Rollover Stockholder
or his or her properties or assets, (B) result in any breach or violation of, or
constitute a default (or an event which, with notice or lapse of time or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a Lien
on property or assets of such Rollover Stockholder pursuant to any Contract to
which such Rollover Stockholder is a party or by which such Rollover Stockholder
or any property or asset of such Rollover Stockholder is bound or affected, or
(C) violate any Law applicable to such Rollover Stockholder or such Rollover
Stockholder’s properties or assets.

 

(d) No Litigation. There is no Legal Proceeding pending against such Rollover
Stockholder or, to the knowledge of such Rollover Stockholder, any other Person
or, to the knowledge of such Rollover Stockholder, threatened against such
Rollover Stockholder or any other Person, in each case that restricts or
prohibits (or, if successful, would restrict or prohibit) the performance by
such Rollover Stockholder of his or her obligations under this Agreement.

 

(e) Reliance. Such Rollover Stockholder understands and acknowledges that
Parent, Merger Sub and the Company are entering into the Merger Agreement in
reliance upon such Rollover Stockholder’s execution, delivery and performance of
this Agreement and the representations and warranties of such Rollover
Stockholder contained herein.

 

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(f) Receipt of Information. Such Rollover Stockholder has been afforded the
opportunity to ask such questions as he or she has deemed necessary of, and to
receive answers from, representatives of Parent concerning the terms and
conditions of the transactions contemplated hereby and the merits and risks of
owning the Parent Shares, including (i) the transactions contemplated by the
Merger Agreement and (ii) the calculation and determination of the number and
value of Parent Shares to be received by such Rollover Stockholder pursuant to
this Agreement. Such Rollover Stockholder acknowledges that he or she has been
advised to discuss with her or her own counsel the meaning and legal
consequences of such Rollover Stockholder’s representations and warranties in
this Agreement and the transactions contemplated hereby.

 

(g) Purchase Entirely For Own Account. Such Rollover Stockholder hereby confirms
that the Parent Shares to be acquired by such Rollover Stockholder will be
acquired for investment for such Rollover Stockholder’s own account, not as a
nominee or agent, and not with a view to the resale or distribution of any part
thereof, and that such Rollover Stockholder has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, such Rollover Stockholder further represents that such Rollover
Stockholder does not presently have any Contract, understanding or undertaking
with any Person to sell, transfer or grant participations to such Person or to
any third Person, with respect to any of his or her Securities.

 

(h) Restricted Securities. Such Rollover Stockholder understands that the Parent
Shares have not been, and will not be, registered under the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder (the
“Securities Act”), by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of such Rollover
Stockholder’s representations as expressed herein. Such Rollover Stockholder
understands that the Parent Shares will constitute “restricted securities” under
applicable U.S. federal and state securities laws and that, pursuant to these
laws, such Rollover Stockholder must hold the Parent Shares indefinitely unless
they are registered with the U.S. Securities and Exchange Commission for resale
by such Rollover Stockholder and qualified by U.S. state authorities, or an
exemption from such registration and qualification requirements is available.
Such Rollover Stockholder acknowledges that Parent has no obligation to register
or qualify the Parent Shares for resale. Such Rollover Stockholder further
acknowledges that, if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the availability of public information, time and manner of sale and
the holding period for the Parent Shares, and on requirements relating to Parent
which are outside of the Rollover Stockholder’s control, and which Parent is
under no obligation and may not be able to satisfy.

 

(i) No Public Market. Such Rollover Stockholder understands that no public
market now exists for the Parent Shares, and that Parent has made no assurances
that a public market will ever exist for the Parent Shares.

 

(j) Legends. Such Rollover Stockholder understands that the Parent Shares, and
any securities issued in respect of or exchange for the Parent Shares, may be
notated with any legend required by the securities Laws of any Governmental
Entity to the extent such Laws are applicable to the Parent Shares represented
by the certificate, instrument, or book entry so legended.

 

(k) Accredited Investor. Such Rollover Stockholder is an accredited investor as
defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

 

(m) No Inducements. None of Parent or any other Person has made any oral or
written representation, inducement, promise or agreement to such Rollover
Stockholder in connection with the subject matter of this Agreement and the
transactions contemplated by this Agreement, other than as expressly set forth
in this Agreement.

 

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7. Representations and Warranties of Parent. Parent represents and warrants to
each Rollover Stockholder that:

 

(a) Organization, Standing and Authority. Parent is duly organized, validly
existing and in good standing under the Laws of the jurisdiction of its
formation and has all requisite power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This Agreement has been duly
and validly executed and delivered by Parent and the execution, delivery and
performance of this Agreement by Parent and the consummation of the Transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of Parent and no other corporate actions or proceedings on the part
of Parent are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. Assuming due authorization, execution and
delivery by the Rollover Stockholders, constitutes a legal, valid and binding
obligation of Parent, enforceable against Parent in accordance with its terms,
except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar Laws affecting creditors’ rights generally
and by general principles of equity (regardless of whether considered in a
proceeding in equity or at Law).

 

(b) Consents and Approvals; No Violations. Except for the applicable
requirements of the Exchange Act, (i) no filing with, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary on
the part of Parent for the execution, delivery and performance of this Agreement
by Parent or the consummation by Parent of the transactions contemplated hereby;
and (ii) neither the execution, delivery or performance of this Agreement by
Parent nor the consummation by Parent of the transactions contemplated hereby
nor compliance by Parent with any of the provisions hereof shall (A) require the
consent or approval of any other Person pursuant to any Contract binding on
Parent or its properties or assets, (B) conflict with or violate any provision
of the organizational documents of Parent, (C) result in any breach or violation
of, or constitute a default (or an event which, with notice or lapse of time or
both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on such property or asset of Parent pursuant to, any Contract
to which Parent is a party or by which such Parent or any property or asset of
Parent is bound or affected, or (D) violate any Law or Order applicable to
Parent or any of Parent’s properties or assets.

 

(c) Issuance of Parent Shares. The Parent Shares will be duly authorized,
validly issued, fully paid and nonassessable, and free and clear of all Liens
when issued.

 

8. Other Covenants and Agreements.

 

Each of the parties hereto agrees to use its, his or her commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable Law to (i)
convey, transfer to and vest in Parent, and to put Parent in possession of, all
of the applicable Securities in accordance with the terms of this Agreement, and
(ii) to consummate and make effective any other transactions contemplated by
this Agreement, including providing information and using commercially
reasonable efforts to obtain all necessary or appropriate waivers, consents and
approvals, and effecting all necessary registrations and filings.

 

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9. Disclosure.

 

(a) Each of the Rollover Stockholders, on the one hand, and Parent, on the other
hand, shall not, and shall cause its respective Affiliates and Representatives
not to, make any press release, public announcement or other public
communication regarding the subject matter of this Agreement without the prior
written consent of the other party, except to the extent that (i) a party may
disclose to its Representatives as such party reasonably deems necessary to give
effect to or enforce this Agreement but only on a confidential basis; (ii) if
required by Law or a court of competent jurisdiction, the SEC, the NASDAQ or
another regulatory body or international stock exchange having jurisdiction over
a party or pursuant to whose rules and regulations such disclosure is required
to be made, including any required Schedule 13D filings and in connection
therewith, the disclosure of this Agreement, but only as far as practicable and
lawful after the form and terms of that disclosure have been notified to the
other parties hereto and the other parties have had a reasonable opportunity to
comment on the form and terms of disclosure, in each case, to the extent
reasonably practicable; or (iii) if the information is publicly available other
than through a breach of this Agreement by a party or its Representatives.

 

(b) Each Rollover Stockholder (i) consents to and authorizes the publication and
disclosure by Parent or its Affiliates of such Rollover Stockholder’s identity
and ownership of the Shares and the existence and terms of this Agreement
(including, for the avoidance of doubt, the disclosure of this Agreement) and
any other information, in each case, that Parent reasonably determines in its
good faith judgment is required to be disclosed by Law in any press release, any
other disclosure document in connection with the Merger Agreement and any
filings with or notices to any Governmental Entity in connection with the Merger
Agreement (or the transactions contemplated thereby), but only as far as
practicable and lawful after the form and terms of that disclosure have been
notified to each of the Rollover Stockholders and each of the Rollover
Stockholders has had a reasonable opportunity to comment on the form and terms
of disclosure, and (ii) agrees to promptly give to Parent or its Affiliates any
information they may reasonably request concerning such Rollover Stockholder for
the preparation of any such documents.

 

10. Termination. This Agreement and the obligations of the Rollover Stockholders
hereunder will terminate immediately upon the valid termination of the Merger
Agreement in accordance with its terms; provided, that the provisions set forth
in Section 9, this Section 10 and Section 12 shall survive the termination of
this Agreement; provided, further, that each Rollover Stockholder shall continue
to have liability for breaches of this Agreement prior to the termination of
this Agreement. If for any reason the Merger contemplated by the Merger
Agreement fails to occur but the Contribution Closing has already taken place,
then Parent shall promptly return the Rollover Shares Documents to each of the
Rollover Stockholders at his or her address set forth in Section 12(h) and take
all such actions as are necessary to restore each such Rollover Stockholder to
the position he or she was in with respect to ownership of the Rollover Shares
prior to the Contribution Closing.

  

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11. Voting of the Securities.

 

(a) Each Rollover Stockholder hereby irrevocably and unconditionally agrees,
severally but not jointly, that, during the period commencing on the date hereof
and continuing until the earliest to occur of (a) the Effective Time and (b) the
valid termination of the Merger Agreement in accordance with its terms (the
“Expiration Time”), at any meeting of the Company’s stockholders, however
called, and at any adjournment thereof, or in any other circumstances where any
vote, consent or other approval is taken in respect of the Merger Agreement,
such Rollover Stockholder shall, and shall cause his or her Affiliates to: (i)
in the case of a meeting, appear at such meeting or otherwise cause its
Securities to be counted as present for purposes of calculating a quorum and
ensure any vote at such meeting be a poll vote; and (ii) vote or otherwise cause
to be voted (including by proxy or written resolution, if applicable) all of his
or her Securities (A) in favor of the authorization and approval of the Merger
Agreement and the Plan of Merger and any related action reasonably required in
furtherance thereof, (B) against the approval of any other proposal or offer
regarding a Competing Transaction or any action contemplated by a Competing
Proposal, or any other transactions, proposal, agreement or action made in
opposition to the approval of the Merger Agreement or in competition or
inconsistent with the Transactions, including the Merger, (C) against any other
action, agreement or transaction that is intended, that could reasonably be
expected, or the effect of which could reasonably be expected, to impede,
interfere with, delay, postpone, discourage or adversely affect the Merger or
any of the other transactions contemplated by the Merger Agreement or this
Agreement or the performance by such Rollover Stockholder of his or her
obligations under this Agreement, including without limitation, (i) any
extraordinary corporate transaction, such as a scheme of arrangement, merger,
consolidation or other business combination involving the Company or any of its
Subsidiaries (other than the Merger), (ii) a sale, lease or transfer of any
material assets of the Company or any Subsidiary or a reorganization,
recapitalization or liquidation of the Company or any Subsidiary, (iii) an
election of new members to the board of directors of the Company, other than
nominees to the board of directors of the Company who are serving as directors
of the Company on the date of this Agreement or as otherwise provided in the
Merger Agreement, (iv) any material change in the present capitalization or
dividend policy of the Company or any amendment or other change to the Company’s
memorandum or articles of association, or (v) any other action that would
require the consent of Parent pursuant to the Merger Agreement, except if
consented to in writing by Parent under the Merger Agreement, (D) against any
action, proposal, transaction or agreement that would result in a breach of any
covenant, representation or warranty or any other obligation or agreement of the
Company contained in the Merger Agreement, or of such Rollover Stockholder or
Parent contained in this Agreement, (E) in favor of any adjournment or
postponement of the Stockholders’ Meeting or any annual or special meeting of
the stockholders of the Company, however called, at which any of the matters
described in clause (A) – (F) hereof is to be considered (and any adjournment or
postponement thereof) as may be requested by Parent or the Company in order to
consummate the Transactions, including the Merger, and (F) in favor of any other
matter necessary or reasonably requested by Parent to effect the Transactions.

 

(b) Each Rollover Stockholder hereby irrevocably appoints Parent and any other
designee of Parent, each of them individually, such Rollover Stockholder’s
irrevocable (for the period commencing on the date hereof and continuing until
termination of this Agreement in accordance with its terms) proxy and
attorney-in-fact (with full power of substitution) to vote or cause to be voted
(including by proxy or written resolution, if applicable) his or her respective
Securities in accordance with Section 11(a) above at the Stockholders’ Meeting
or other annual or special meeting of the stockholders of the Company, however
called, including any adjournment or postponement thereof, at which any of the
matters described Section 11(a) hereof is to be considered, in each case prior
to the Expiration Time. Each Rollover Stockholder affirms that the irrevocable
proxy set forth in this Section 11(b) is given in connection with the execution
of the Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of such Rollover Stockholder under this Agreement.
Each Rollover Stockholder intends this proxy to be irrevocable (until the
termination date, as described below) and coupled with an interest and will take
such further actions or execute such other instruments (including any proxies
circulated by the Company for any meetings of stockholders of the Company) as
may be necessary to effectuate the intent of this proxy, and hereby revokes any
proxy previously granted by such Rollover Stockholder with respect to the
Securities. If for any reason the proxy granted herein is not irrevocable, then
each Rollover Stockholder agrees to vote his or her Securities in accordance
with Section 11(a) above as instructed by Parent, or any other designee of
Parent, in writing prior to the termination of this Agreement in accordance with
its terms.  The parties hereto agree that the foregoing is a voting agreement.
The irrevocable proxy granted pursuant to this Section 11(b) shall terminate on
the earliest to occur of (a) the Effective Time and (b) the valid termination of
the Merger Agreement in accordance with its terms.

 

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12. Miscellaneous.

 

(a) Entire Agreement. This Agreement (together with the Merger Agreement and any
other agreement or instrument delivered in connection with the transaction
contemplated by this Agreement and the Merger Agreement) constitutes the entire
agreement, and supersedes all prior written agreements, arrangements,
communications and understandings and all prior and contemporaneous oral
agreements, arrangements, communications and understandings among the parties
with respect to the subject matter hereof and thereof.

 

(b) Assignment; Successors. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement may be assigned or delegated, in
whole or in part, by operation of Law or otherwise, by any party without the
prior written consent of the other parties and the Company, and any such
assignment without such prior written consent shall be null and void. Subject to
the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the parties and their respective successors
and permitted assigns.

 

(c) Amendment; Modification and Waiver. This Agreement may not be amended,
modified or supplemented in any manner, whether by course of conduct or
otherwise, except by an instrument in writing signed on behalf of each party
hereto and the Company, and otherwise as expressly set forth herein. No failure
or delay of any party in exercising any right or remedy hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right
or power, or any abandonment or discontinuance of steps to enforce such right or
power, or any course of conduct, preclude any other or further exercise thereof
or the exercise of any other right or power. The rights and remedies of the
parties hereunder are cumulative and are not exclusive of any rights or remedies
which they would otherwise have hereunder. Any agreement on the part of a party
to any such waiver shall be valid only if set forth in a written instrument
executed and delivered by such party and the Company.

 

(d) Survival of Representations and Warranties. All representations and
warranties of each Rollover Stockholder or of Parent in connection with the
transactions contemplated by this Agreement contained herein shall survive the
execution and delivery of this Agreement, any investigation at any time made by
or on behalf of Parent or any Rollover Stockholder, and the issuance of the
Parent Shares.

 

(e) Interpretation. Whenever the words “include,” “includes” or “including” are
used in this Agreement, they shall be deemed to be followed by the words
“without limitation”. The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such term. When reference is
made to an Article or Section, such reference is to an Article or Section of
this Agreement unless otherwise indicated. References to sums of money are
expressed in lawful currency of the U.S. and “$” refers to U.S. dollars. The
descriptive headings contained in this Agreement are included for convenience of
reference only and shall not affect in any way the meaning or interpretation of
this Agreement. All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto, unless otherwise defined therein. The words “hereof”, “herein”
and “hereunder” and words of similar import, when used in this Agreement, refer
to this Agreement as a whole and not to any particular provision of this
Agreement. For purposes of this Agreement, “beneficially owns,” “beneficial
owner” or “beneficial ownership” with respect to any securities means having
“beneficial ownership” of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act).

 

(f) Statutory Provisions. All references to statutes, statutory provisions,
enactments, directives or regulations shall include references to any
consolidation, reenactment, modification or replacement of the same, any
statute, statutory provision, enactment, directive or regulation of which it is
a consolidation, re-enactment, modification or replacement and any subordinate
legislation in force under any of the same from time to time.

 

9

 

  

(g) Recitals and Schedules. References to this Agreement include the recitals
and schedules which form part of this Agreement for all purposes. References in
this Agreement to the parties are references respectively to the parties and
their legal personal representatives, successors and permitted assigns.

 

(h) Notices. All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (i) when delivered in person, (ii) upon confirmation of receipt after
transmittal by facsimile or email (to such number or address specified below or
another number or numbers or address or addresses as such Person may
subsequently specify by proper notice under this Agreement), with a confirmatory
copy to be sent by overnight courier, and (iii) on the next Business Day when
sent by national overnight courier, in each case to the respective parties and
accompanied by a copy sent by email (which copy shall not constitute notice).
All notices hereunder shall be delivered to the addresses set forth below or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice:

 

(A)If to Parent:

 

Xiaoping Zhang

c/o The Corporation Trust Company, 1209 Orange Street

Wilmington, Delaware 19801

Email: zxp@sorl.com.cn

 

with copies to (which shall not constitute notice):

 

Ke Geng, Esq.

Nima Amini, Esq.

O’Melveny & Myers LLP

Yin Tai Center, Office Tower, 37th Floor

No. 2 Jianguomenwai Ave

Chao Yang District

Beijing, 100022

People’s Republic of China

Facsimile: +86-10-6563-4201

Email: kgeng@omm.com; namini@omm.com

 

(B)If to any Rollover Stockholder:

 

Xiaoping Zhang

No. 2666 Kaifaqu Avenue Ruian Economic Development District

Ruian City, Zhejiang Province, PRC 325200

Email: zxp@sorl.com.cn

 

with copies to (which shall not constitute notice):

 

Ke Geng, Esq.

Nima Amini, Esq.

O’Melveny & Myers LLP

Yin Tai Center, Office Tower, 37th Floor

No. 2 Jianguomenwai Ave

Chao Yang District

Beijing, 100022

People’s Republic of China

Facsimile: +86-10-6563-4201

Email: kgeng@omm.com; namini@omm.com

 

10

 

  

(C)If to the Company :

 

Phyllis Huang

No. 2666 Kaifaqu Avenue Ruian Economic Development District

Ruian City, Zhejiang Province, PRC 325200

Email: phyllis@sorl.com.cn

 

with copies to (which shall not constitute notice):

 

Fang Xue, Esq.

Gibson, Dunn & Crutcher LLP
Unit 1301, Tower 1, China Central Place

No. 81 Jianguo Road, Chaoyang District

Beijing, 100025, P.R.C.

Tel +86 10 6502 8600

Fax +86 10 6502 8510

Email: fxue@gibsondunn.com

 

(i) Severability. Whenever possible, each provision or portion of any provision
of this Agreement shall be interpreted in such manner as to be effective and
valid under applicable Law, but if any provision or portion of any provision of
this Agreement is held to be invalid, illegal or unenforceable in any respect
under any applicable Law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other provision or portion
of any provision in such jurisdiction, and this Agreement shall be reformed,
construed and enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision or portion of any provision had never been contained
herein.

 

(j) Remedies; Enforcement.

 

(i) The parties hereto agree that this Agreement shall be enforceable by all
available remedies at Law or in equity.

 

(ii) Each Rollover Stockholder further acknowledges and agrees that monetary
damages would not be an adequate remedy in the event that any covenant or
agreement of such Rollover Stockholders in this Agreement is not performed in
accordance with its terms, and therefore agree that, in addition to and without
limiting any other remedy or right available to Parent or its Affiliates, Parent
and its Affiliates will have the right to an injunction, temporary restraining
order or other equitable relief in any arbitral body or court of competent
jurisdiction enjoining any such breach and enforcing specifically the terms and
provisions hereof; provided, that such right of specific performance will be
available to Parent only if Parent has performed in all material respects its
obligations under this Agreement and the Merger Agreement, unless a failure to
perform was primarily caused by the breach of the respective Roller Stockholder
under this Agreement. Each Rollover Stockholder agrees not to oppose the
granting of such relief in the event an arbitral body or a court determines that
such a breach has occurred, and to waive any requirement for the securing or
posting of any bond in connection with such remedy. All rights, powers, and
remedies provided under this Agreement or otherwise available in respect hereof
at Law or in equity shall be cumulative and not alternative, and the exercise or
beginning of the exercise of any thereof by Parent or its Affiliates shall not
preclude the simultaneous or later exercise of any other such right, power or
remedy by Parent or its Affiliates. Notwithstanding anything contrary in the
foregoing, under no circumstances will Parent be entitled to both the monetary
damages under Section 12(j)(i) and specific performance under this Section
12(j)(ii).

 

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(k) Third Party Beneficiaries. Nothing in this Agreement, express or implied, is
intended to or shall confer upon any Person other than the parties and their
respective successors and permitted assigns any legal or equitable right,
benefit or remedy of any nature under or by reason of this Agreement, provided,
however, that the Company is an express third-party beneficiary of this
Agreement and shall be entitled to specific performance of the terms hereof,
including an injunction or injunctions to prevent breaches of this Agreement by
the parties hereto, in addition to any other remedy at Law or equity.

 

(l) Governing Law; Jurisdiction; Venue. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware without giving
effect to its principles or rules of conflict of laws to the extent such
principles or rules would require or permit the application of the Laws of
another jurisdiction. EACH OF THE PARTIES IRREVOCABLY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF THE COURT OF CHANCERY OF THE STATE OF DELAWARE LOCATED IN
WILMINGTON, DELAWARE (AND ANY STATE APPELLATE COURT THEREFROM WITHIN THE STATE
OF DELAWARE) FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY (OR,
IF THE COURT OF CHANCERY OF THE STATE OF DELAWARE DECLINES TO ACCEPT
JURISDICTION OVER A PARTICULAR MATTER, ANY STATE OR FEDERAL COURT WITHIN THE
STATE OF DELAWARE). EACH OF THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVES
ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING
OUT OF OR RELATING TO THIS LETTER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE LOCATED IN WILMINGTON,
DELAWARE AND WAIVES ANY CLAIM THAT SUCH SUIT OR PROCEEDING HAS BEEN BROUGHT IN
AN INCONVENIENT FORUM. EACH PARTY AGREES THAT LIABILITY OF THE SPONSOR ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY
SHALL BE DETERMINED SOLELY BY A FINAL AND UNAPPEALABLE JUDGMENT IN ANY ACTION OR
PROCEEDING (OR A SETTLEMENT TANTAMOUNT THERETO) AND ANY SUCH FINAL AND
UNAPPEALABLE JUDGMENT SHALL BE CONCLUSIVE AND MAY BE ENFORCED BY SUIT ON THE
JUDGMENT IN ANY JURISDICTION WITHIN OR OUTSIDE THE UNITED STATES OR IN ANY OTHER
MANNER PROVIDED IN LAW OR IN EQUITY.

 

(m) Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives
to the fullest extent permitted by applicable Law any right it may have to a
trial by jury with respect to any litigation directly or indirectly arising out
of, under or in connection with this Agreement or the Transactions. Each of the
parties hereto (i) certifies that no Representative of any other party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce the foregoing waiver and (ii) acknowledges
that it and the other parties hereto have been induced to enter into this
Agreement and the Transactions, as applicable, by, among other things, the
mutual waivers and certifications in this Section 12(m).

 

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(n) Expenses. Other than otherwise provided for in this Agreement, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.

 

(o) Counterparts. This Agreement may be executed in two or more counterparts
(including by facsimile transmission or pdf), all of which shall be considered
one and the same instrument and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other
parties.

 

(p) No Presumption against Drafting Party. Each of the parties to this Agreement
acknowledges that he/her/it has been represented by independent counsel in
connection with this Agreement and the transactions contemplated by this
Agreement. Accordingly, any rule of Law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the drafting
party has no application and is expressly waived.

 

(q) Independent Nature of Rollover Stockholders’ Obligations and Rights. The
obligations of each Rollover Stockholder under this Agreement are several and
not joint, and no Rollover Stockholder is responsible in any way for the
performance or conduct of any other Rollover Stockholder in connection with the
transactions contemplated hereby. Except as expressly required by the Exchange
Act, nothing contained herein and no action taken by any Rollover Stockholder
pursuant hereto, shall be or shall be deemed to constitute a partnership,
association, joint venture, or joint group with respect to the Rollover
Stockholders. Each Rollover Stockholder agrees that no other Rollover
Stockholder has acted as an agent for such Rollover Stockholder in connection
with the transactions contemplated hereby.

 

[Signature page follows]

 

13

 

 

IN WITNESS WHEREOF, Parent and the Rollover Stockholders have caused to be
executed or executed this Agreement as of the date first written above.

  

  Ruili International inc.         By: /s/ Xiaoping Zhang   Name:  Xiaoping
Zhang   Title: Director                                    XIAOPING ZHANG      
  By: /s/ Xiaoping Zhang         SHUPING CHI         By: /s/ Shuping Chi        
XIAOFENG ZHANG         By: /s/ Xiaofeng Zhang

 

14

 

  

Schedule A

 

 

(A) Rollover Stockholder Name

  (B) Number of Rollover Shares   (C) Other Securities (Type/Number)  (D) Number
of Parent Shares and % Beneficial Ownership of Parent  XIAOPING ZHANG 
 9,087,527   N/A   9,087,527              47.07% SHUPING CHI   1,135,938   N/A 
 1,135,938              5.88% XIAOFENG ZHANG   1,135,938   N/A   1,135,938    
         5.88%

 

 

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